It may be naive to presume one can completely decouple from market swings, but perhaps what got me thinking about this was in 2020 when a lot of low vol ETFs were getting negative coverage from financial media. If we look at Vanguard's low vol ETF for instance, performance after 2020 wasn't terrible; the product contract lays out a longer-term view after all. Three years isn't that long term but that's all Morningstar had
I'm trying to be objective as I can, but seems like 6% is a bit low when assuming double-digit sigma volatility. Some have cheekily re-labeled these strategies as "minimum return" strategies.
I'm aware there is a cherry-picking element to this article but the underperformance has persisted for the better part of two years now, as I write the post. Relevant excerpt:
Between February 26 — when the first U.S. case of Covid-19 was announced — and March 31, 2020, some of the largest low vol strategies defied investor expectations, including the Invesco S&P 500 Low Volatility ETF and iShares Edge MSCI Minimum Volatility USA ETF, according to PanAgora. The S&P 500 lost 17.22 percent during the period, while the Invesco ETF and iShares fund lost significantly more than that. The Invesco and iShares funds lost 20.29 percent and 18.35 percent, respectively.