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Risk ETF mutual funds suddenly becoming a higher risk for investors.
People buy these low risk bonds because even though.
-- they don't promise to outperform the broader market they also promise not to fall back to earth quite so quickly that something weird has been happening.
These so called low risk funds are actually beating the red hot stock market this year.
So what's going on and it's your big -- here dreaming out to him to straps for Morningstar -- I could tell you up.
This sounds like one of those crazy promises from Wall Street.
Only now -- it's -- risk it's a slew ranch this -- Gaudin.
What's going on here.
Well overall including investments.
You know death or not promising no losses or anything like that.
What they do what they do offer though is in a bullish market they typically.
Have quality underperform and -- bearish market they can outperform and we saw that in the financial crisis where.
The S&P 500 low volatility index are at its worst point loss 35%.
Which is still what what -- -- I guess -- iPod I.
I tell you by the way these things are -- -- right now.
And I guess they have something to do with the way some of these low volatility stocks are performing right health care consumer discretionary consumer state.
Guys are up 17%.
Year to date.
Is that what's going on that the shots that normally -- same old same old are doing really well.
Well yes allow the defensive sectors of the market are actually doing very well in the last year.
Which is actually pushed up the returns -- low volatility indexes as it -- is climbing up bordering.
We got -- -- in a lot of investor flows on these funds are actually relatively new -- the oldest one is only two years old.
So while there's lots of investor money flowing into the into the space it's still tiny compared to the overall equity market in the funds that are fallen in a broad market strategies couldn't some of their success be attributed to the fact that they were really small and it's much easier to growl when your time -- when your date.
Well these funds -- index funds so there's not like an active portfolio manager and calls and so a small portfolio could really help them out.
These are just index -- so I don't think the small portfolio is the advantage now I will say.
Longer term years down the road if everyone starts in Boston and low volatility stocks.
The -- performance will definitely go away.
Are you guys recommending announced well.
We did we are still recommend them now because still a lot of investors out there.
That -- got out of stock market and the financial crisis and -- -- got back in and they're realizing to retire you're gonna have to have some stocks in your portfolio.
And a little volatility.
Equity investment may be the way to dip your toe back into this market.
I think that's a good idea they're too that you're talking about SP LB and US and they.
Let's talk about those for just a second here so those are two of these ETFs that are you now.
Doing well here.
Yeah I mean -- still be is the largest fun little over five billion and is the oldest that a little over two years.
It's actually had very good performance outperform the S&P 500 since its inception.
The only issue I have with it is that I did them literally only picks the -- the least volatile hundred stocks in the S&P 500.
So it has very high sector concentrations like for example right now has over 30% -- utilities.
Host is can you -- you may be OK with that but longer term -- 30% utilities -- very high allocation -- -- got another idea there US and today.
And US MV.
What it does differently is it actually.
Diversified across the sectors so you don't get that 30% allocation utilities you get a much more diverse portfolio.
And acts -- a little bit cheaper adds that zero point 15%.
And expenses per year well you know there at sixteen and 14% respectively so something's going right there ten seconds -- coming not.
Really appreciate your time that.
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