As September unfolds, the financial market is experiencing its usual volatility, posing challenges to the Big Tech trade. Despite this instability, one low-volatility ETF is standing its ground. Alliance Bernstein is the driving force behind the AB US Low Volatility Equity ETF, which is still making significant investments in the tech sector. FactSet data reveals that the ETF’s top holdings include tech giants like Microsoft, Apple, and Alphabet.
Noel Archard, the global head of ETFs and investor solutions at Alliance Bernstein, emphasizes the significance of technology in our daily lives. However, he acknowledges that there are other industries worth considering. He points out that the interest in broad investments is on the rise, highlighting the diverse opportunities available in the market. In comparison, Invesco’s Low Volatility ETF leans towards traditionally stable stocks like Berkshire-Hathaway, Coca-Cola, and Visa.
Archard advocates for a balanced approach to investment by including historically less volatile sectors such as consumer staples and financials in the ETF. He views these industries as “bumpers” that can help cushion the impact of market fluctuations. For instance, Alliance Bernstein’s low-volatility ETF also holds positions in companies like Procter & Gamble and Fiserv, adding a layer of diversity to the portfolio. Archard warns against overlooking the importance of volatility, as it can significantly impact investment strategies when it unexpectedly arises.
Despite the challenges posed by September’s volatility, the AB US Low Volatility ETF has managed to deliver a solid performance. As of Wednesday’s closing, the ETF has recorded a 16% increase year-to-date, showcasing its resilience in the face of market uncertainties. This performance highlights the effectiveness of integrating low-volatility ETFs into investment portfolios as a strategy to navigate turbulent market conditions.
The role of low-volatility ETFs like the AB US Low Volatility Equity ETF is crucial in today’s market environment. By diversifying investments across stable sectors and tech giants, investors can better manage risk and capitalize on emerging opportunities. As volatility continues to shape the financial landscape, embracing low-volatility strategies can provide a sense of stability and resilience in uncertain times.