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2 Top Defensive ETFs That Prioritize Stability Over Excitement
Yahoo Finance· 2026-03-04 19:31
Market Overview - The stock market has been experiencing significant turbulence in 2026, influenced by factors such as the Iran conflict, tariff uncertainty, and fears of AI disruption, with the S&P 500 showing notable swings [1] - The CBOE Volatility Index (VIX) has increased by over 50% since the beginning of the year, indicating heightened market volatility [1] Investment Strategies - For investors seeking stability in an uncertain market, exchange-traded funds (ETFs) can provide a viable option [2] - High-yield dividend stocks are generally less volatile during market downturns, as they are typically more mature businesses with stable revenue streams compared to non-dividend stocks [3] ETF Recommendations - The Vanguard High Dividend Yield ETF (NYSEMKT: VYM) is highlighted as a strong option, tracking an index of stocks with above-average dividend yields and featuring a low expense ratio of 0.04% [4] - The Vanguard High Dividend Yield ETF holds 562 different stocks, primarily large, established companies, with a current dividend yield of approximately 1.7%, making it appealing for income-focused investors [5] - The iShares MSCI U.S. Minimum Volatility Factor ETF (NYSEMKT: USMV) is designed to minimize overall portfolio volatility rather than focusing on dividend stocks [6] - This ETF consists of 170 different stocks, including major companies like ExxonMobil and Johnson & Johnson, and has a relatively low expense ratio of 0.15% [7] - With a 3-year beta of 0.59, the U.S. Minimum Volatility Factor ETF is significantly less volatile than the S&P 500, which has a beta of 1.00, making it suitable for investors looking for stock exposure with minimal downside risk [8]