| Defensive strategies, like those followed by low-volatility ETFs, can produce better risk-adjusted returns while smoothing out the highs and lows of the market. Low-volatility strategies offer defensive exposure to the stock market, attempting to give investors a smoother ride with better performance during market downturns.
In exchange, they tend to lag during strong rallies. That's an attractive trade-off for risk-averse investors. There are other ways to reduce risk, such as allocating a larger portion of a portfolio to cash or bonds and less to stocks. But low-volatility stocks will likely offer a better risk/reward trade-off than the broad stock market or a stock/bond portfolio of comparable volatility. ..............................................Full Article: Source
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