Market volatility is a reality for investors in 2026. After years of rate hikes and global macro uncertainty, both new and seasoned investors are increasingly focused on risk-adjusted returns. That means seeking exposure to growth and stability. Low-volatility ETFs aim to provide a smoother investment ride by prioritizing stocks or strategies that historically exhibit less fluctuation than the broader market.
Low-volatility ETFs don’t eliminate risk, but they seek to reduce the amplitude of market swings, often by overweighting defensive sectors like consumer staples, utilities, and healthcare, or selecting stocks with historically stable performance. This can be especially appealing for conservative growth portfolios, retirees, or anyone who wants steadier exposure without completely abandoning equities.
Here’s a look at seven low-volatility ETFs worth considering in 2026, with details to help you compare and decide.
- iShares MSCI USA Min Vol Factor ETF (USMV)
Investment Thesis: USMV stands as one of the most widely recognized low-volatility ETFs. It tracks the MSCI USA Minimum Volatility Index, which selects U.S. large- and mid-cap stocks that historically exhibit lower risk characteristics relative to the overall market. This makes it a go-to for investors seeking equity exposure with potentially smaller drawdowns during turbulent periods.
Assets Under Management: $23 billion
Expense Ratio: 0.15%
Top Holdings: Exxon Mobil, Johnson & Johnson, Merck (among others) sectors that typically show more stable earnings through cycles.
Why It’s Worth Buying: USMV’s breadth across defensive but profitable large caps can help cushion portfolios during downturns while still participating in market growth.
- Invesco S&P 500 Low Volatility ETF (SPLV)
Investment Thesis: SPLV selects the 100 least volatile stocks from the S&P 500, with the goal of reducing downside exposure. Unlike broader cap-weighted funds, this approach systematically favors historically more stable large companies which can help temper risk without abandoning equities entirely.
Assets Under Management: $7.8 billion
Expense Ratio: 0.25%
Top Holdings: Often includes defensive stalwarts like Coca-Cola and Johnson & Johnson, plus diversified exposure across non-cyclical sectors.
Why It’s Worth Buying: SPLV’s simple but effective methodology like targeting historically steady performers within the S&P 500 makes it a solid core holding for investors wary of persistent volatility.
- iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)
Investment Thesis: EEMV brings the low-volatility strategy to emerging markets, a space traditionally seen as riskier, but with potential for smoother return profiles when selected carefully. By tracking the MSCI Emerging Markets Minimum Volatility Index, this ETF targets stocks with lower realized risk in developing economies.
Assets Under Management: $3.36 billion
Expense Ratio: 0.25%
Dividend Yield: 2.53% (trailing distribution yield)
Top Holdings: Broad mix across multiple emerging regions with reduced beta relative to standard EM indexes.
Why It’s Worth Buying: For investors seeking international diversification with lower volatility goals, EEMV offers exposure to emerging markets without excessive risk.
- iShares MSCI Global Min Vol Factor ETF (ACWV)
Investment Thesis: ACWV extends the low-volatility framework globally, including developed and emerging markets in its scope. By blending equities with lower historical price swings across regions, it provides broad diversification while attempting to limit drawdowns. Funds that spread risk across geographies often weather localized downturns better than domestic-only portfolios.
Assets Under Management: $3.42 billion
Expense Ratio: 0.20%
Top Holdings: Broad global basket of low-volatility names including large companies across North America, Europe, and Asia.
Why It’s Worth Buying: ACWV is appealing for investors seeking a global equity foundation with volatility mitigation embedded.
- Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
Investment Thesis: SPHD combines low-volatility criteria with high dividend selection. It zeroes in on S&P 500 stocks that not only have lower volatility but also offer attractive dividend yields, a useful feature for income-oriented investors. SPHD’s methodology typically results in significant allocations to utilities, real estate, and consumer staples, sectors that provide essentials and steady cash flows.
Assets Under Management: $3.1 billion
Expense Ratio: 0.30%
Dividend Yield: 3.4%
Top Holdings: Includes dividend stalwarts with stable earnings and yields above market averages.
Why It’s Worth Buying: SPHD is appealing for investors who want defensive exposure with income, useful in retirement portfolios or as part of a diversified yield strategy.
- SPDR SSGA U.S. Large Cap Low Volatility Index ETF
Investment Thesis: This ETF tracks large-cap stocks with relatively low realized volatility. It blends exposure across multiple sectors like financials, industrials, real estate, and utilities helping investors capture broad market stability without overconcentration in a single sector.
Assets Under Management: $778.4 million
Expense Ratio: 0.12%
Top Holdings: Large, diversified portfolio of lower-volatility U.S. companies.
Why It’s Worth Buying: Its lower expense structure and broad basket make it attractive for cost-conscious investors who still want meaningful downside defense.
- Invesco S&PMidCapand SmallCap Low Volatility ETFs (XMLV & XSLV)
Investment Thesis: Volatility is not just a large-cap concern, mid- and small-cap stocks can be highly erratic. These two ETFs apply low-volatility screens to their respective Russell indices, aiming to capture smaller companies that have historically shown more consistent price behavior.
Assets Under Management:
- XMLV (MidCap) $839.5 million
- XSLV (SmallCap) $295.6 million
Expense Ratios: 0.25% each
Top Holdings: Sector diversified exposure with emphasis on stable mid- and small-cap performers.
Why It’s Worth Buying: These funds can be especially useful for investors who want size diversification while keeping risk in check, a common blind spot in many portfolios tilted toward large caps alone.
What are the Pros and Cons of Low-Volatility ETFs?
Pros
Reduced Drawdowns: These ETFs aim to soften the impact of market declines, often falling less than broader indexes in down markets.
Better Sleep at Night: Lower volatility can make it easier for conservative investors to stay invested through turbulent periods.
Diversification Benefits: When combined with traditional core funds, low-volatility ETFs add defensive ballast to balanced portfolios.
Potential for Comparable Returns: Over long periods, low-vol funds often deliver competitive* risk-adjusted returns* relative to broader market benchmarks.
Cons
Potential Underperformance in Strong Bull Markets: Low volatility can also mean muted upside during robust rallies since these funds typically avoid high-beta, high-growth names.
Sector Bias: Many low-vol ETFs overweight utilities, staples, and defensive sectors which may lag cyclical sectors in growth phases.
Complex Construction: Factor-based funds like global min vol blends multiple metrics, which can make them hard to evaluate without deeper research.
How to Use Low-Volatility ETFs in Your Portfolio
Low-volatility ETFs aren’t designed to replace core holdings like a broad-market S&P 500 fund, but they can play a strategic role:
- Defensive Core Slice: Replace a portion of broad equities with one or more low-vol funds to reduce overall portfolio risk.
- Risk-Adjusted Income: Funds like SPHD offer yield plus defense, appealing to income-oriented strategies.
- Diversifier for Turbulence: Pairing USMV or ACWV with traditional growth ETFs can smooth out ride-along volatility without sacrificing long-term equity exposure.
Takeaway
As markets continue to adjust to macroeconomic shifts, rate expectations, and sector rotations in 2026, low-volatility ETFs remain solid tools for investors seeking a more controlled equity experience. Whether your goal is steady capital growth, income stability, or downside protection, incorporating these defensive ETFs can help you navigate uncertain waters without constant stress.
Investors should remember that no strategy eliminates risk, but thoughtful allocation to low-volatility ETFs combined with broader portfolio diversification can help you stay invested through market cycles with greater confidence.
We believe the information in this material is reliable, but we cannot guarantee its accuracy or completeness. The opinions, estimates, and strategies shared reflect the author’s judgment based on current market conditions and may change without notice.
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