Investors are flocking to funds that are able to shield investors from major market swings despite they didn’t work exactly as advertised during the peak of the Covid-19 pandemic.
About $6.5 billion has poured into low-volatility mutual funds and exchanges this year, putting the funds on track for their first annual inflows since 2019, according to Morningstar Direct. Volatility funds promise to run the market more smoothly by holding stocks with the smallest volatility in a day — higher or lower. That bias often favors stocks of utilities, consumer goods and real estate companies that tend to be less sensitive to economic booms and busts.
