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Best Low Volatility ETFs UK

Disclaimer Fact Checked

Investing in Low Volatility ETFs (Exchange Traded Funds) is one of the most popular ways to ensure healthy return while riding out the ups and downs of the stock market. This is more important than ever in the modern COVID era.

There are, however, a number of factors, including minimum investment, its performance in recent months and any fees, which investors may choose to review before investing in any ETF. This guide will provide a look into some popular investments for a Low Volatility ETF Portfolio.

Key Takeaways on Low Volatility ETF

  • Low volatility ETFs are popular among investors as a way of adding stability to a portfolio.
  • Some of the most popular low volatility ETFs to purchase include the Powershares S&P 500 Low Volatility ETF (SPLV), the Invesco High Dividend Low Volatility ETF (SHPD), and the FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD).
  • Many providers offer low volatility ETFs targeting different sectors, such as clean energy, emerging markets, S&P 500 and more.

10 Popular Low Volatility ETF UK 2022 List

  1. Powershares S&P 500 Low Volatility ETF (SPLV)
  2. Invesco High Dividend Low Volatility ETF (SHPD)
  3. FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD)
  4. Invesco S&P MidCap Low Volatility ETF (XMLV)
  5. iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)
  6. iShares MSCI USA Min Vol Factor ETF (USMV)
  7. iShares Edge MSCI EAFE Minimum Volatility ETF (EFAV)
  8. BMO Low Volatility Canadian Equity ETF (ZLB)
  9. Legg Mason Low Volatility High Dividend ETF (LVHD)
  10. Invesco FTSE Emerging Markets High Dividend Low Volatility UCITS ETF USD (EMHD)

Low Volatility ETFs UK Reviewed

1. Powershares S&P 500 Low Volatility ETF (SPLV)

Containing some of the US’s largest companies, from Apple to ExxonMobil to IBM, this fund aims to focus on so-called “Blue Chip” stocks that are likely to offer significant returns, no matter the state of the market. While having dipped slightly in 2020, which was to be expected as a global pandemic hit, the ETF has gradually grown over the last year.

This ETF will give you exposure to some of the largest companies, while staying reasonably stable when the individual stocks may take a dip on negative profits or other news.

With only a 0.25% expense ratio, this low volatility ETF is reasonably affordable to hold, priced currently at $63.60, if you have a chunk of money to put into the market. Additionally, the stock pays a regular dividend, allowing you to grow your holding in the stock or reinvest your proceeds elsewhere.

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2. Invesco High Dividend Low Volatility ETF (SPHD)

SPHD offers great opportunities for dividend investors, while staying pretty consistent in its value, otherwise, growing over time. In addition to being a low volatility ETF, SPHD is a monthly dividend payer, growing your portfolio with reinvestment, as well as appreciation in value over time. A good example of why time in the market is better than timing the market, you stand to benefit from the stable growth of the stock and the small distributions it gives you on a monthly basis.

In addition to the above-mentioned features, it is also a well-diversified fund, having fingers in many pies. With an 18.93% return in the last year, it has a low expense ratio of 0.3%, only slightly more expensive than SPLV. A popular pick for dividend investors looking for low volatility and a popular choice for a low volatility dividend ETF.

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3. FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD)

A popular investment for those who want to keep ESG (Environmental, Social and Governance) factors in mind when building their portfolio, this clean energy ETF contains companies that are working towards making themselves more friendly to prevent climate change. Containing stocks such as Alphabet (Google’s parent company), Adobe, Microsoft and Johnson & Johnson, the fund has some big names in there. Whether these are truly companies who have either green initiatives or have divested from fossil fuels would require further research, however.

Currently, the ETF is priced at a reasonable €24.91, with an expense ratio of 0.29%, which remains competitive. The chart above shows how the ETF has performed over the last year.

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4. Invesco S&P MidCap Low Volatility ETF (XMLV)

Tracking the 500 largest companies listed on the stock exchange in the United States, this low volatility S&P 500 ETF has performed well over the last year, without any major dips (see chart below). While tracking many different bigger companies that, in themselves, may have volatile stock prices, spread across five-hundred different stocks, this provides stable growth and low volatility.

Managed by Invesco, a well-known provider of ETFs, the fund doesn’t provide a dividend, however, would allow for steady growth in a portfolio. With a slightly lower expense ratio than the previous one, sitting at 0.25%, the fees for the ETF are relatively competitive. However, while still affordable, the price of the stock is currently at $55.14, a significant rise since this time last year.

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5. iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)

While it can be interesting to invest in Emerging Markets, the issues that many investors face is the volatility caused by the very fact that the businesses in these ETFs are emerging and uncertain. They may not be your typical Blue Chip stock, of which users may expect to perform well.

However, by contrast, this low volatility ETF contains many of the stocks which may be thought to be in Emerging Markets without the uncertainty of individual stocks. This also means that an investor can diversify their portfolio at reasonably minimal risk. Particularly focused on the Asia Pacific Markets, this ETF is currently priced at $62.97. Again, a reasonable price for an entry-level investor to get into the market. With an expense ratio of 0.25%, the fund measures up against other funds like it.

With many ETFs focusing on the US and UK markets, gaining exposure to other markets can be difficult. This is a popular way to do that. See above for a chart showing the ETFs performance over the last twelve months.

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6. iShares MSCI USA Min Vol Factor ETF (USMV)

This ETF offers further exposure to, specifically, the markets in the United States. With many well-known companies, such as Accenture, PepsiCo and Merck & Co included in the mix of stocks in the fund. A return in the last year of 27.26% makes it an popular pick in the market, offering a route to diversification.

Currently priced at $77.56 a share, it may be one of the more pricey ETFs for entry-level investors, however, not out of reach. This is also a popular pick for the portfolio of seasoned investors too. With an expense ratio of just 0.15%, it is one of the cheapest ETFs in terms of fees on this list. If your focus is on the US markets currently, this is a popular way to gain diversification into US markets. Above is a chart of the price over the last year.

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7. iShares Edge MSCI EAFE Minimum Volatility ETF (EFAV)

Much like the other Low Volatility ETFs that we have covered, the aim is to ride out the storm of stock market fluctuations. This one, by iShares, a well-known provider of ETFs, is currently priced at $77.04, making it one of the more pricey ETFs on this list. However, it is still within an affordable range for beginner investors and seasoned investors alike.

An expense ratio of 0.32% makes this iShares ETF suitable for those looking for investments with low fees and decent return. With an annualised return of 12.52%, it is one of the lower returns. With holdings including Nestle, Unilever and National Grid, the fund contains some solid stocks and is definitely well-diversified.

An inexpensive fund with consistent returns from a trusted ETF provider makes this a popular option. See above for a chart of the funds performance in the last year.

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8. BMO Low Volatility Canadian Equity ETF (ZLB)

While there are many low volatility ETFs focused on the US, UK and Asian markets, very few have equities exclusively from the Canadian market. Offering an opportunity to tap into a seldom explored market, this BMO fund has a very steady price range, from $33.30 to $40.63 in the last year. There is, as you can see by the chart below, however, opportunities for growth.

Currently priced at CAD $39.33, the ETF also pays a quarterly dividend, currently sitting at CAD $0.24/per share. A popular investment for some needing a mixture between growth and income, it currently has a 0.39% expense ratio, higher than most others so far but maybe worth it for the growth and dividends. While not containing particularly well-known equities, with the exceptions of a few Canadian financial institutions, the ETF has produced a return of 22.75% over the last twelve months. Below, you can see a chart of its growth over the last year.

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9. Legg Mason Low Volatility High Dividend ETF (LVHD)

Another Low Volatility High Dividend ETF, LVHD has climbed quite a bit in the last year, increasing the ETF’s value by around $10. Currently priced at $37.37, the ETF is popular for investors who plan to re-invest dividends back into the fund. Returning 15.1% in the last twelve months, the stock has the opportunity to grow, as dividends help increase your position in it.

A well-diversified fund, it currently has an annual dividend over $1.05, which, multiplied by an increased holding. In addition, the fund contains many well-known and well-performing companies, from Pfizer to Proctor & Gamble to 3M. This stock is fairly volatile when looking at it over a day or week, which may put off risk-averse investors.

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10. Invesco FTSE Emerging Markets High Dividend Low Volatility UCITS ETF USD (EMHD)

Our final choice and another Low Volatility Emerging Markets ETF, this Invesco fund is geared towards dividend investors who are also looking for reasonably stable assets to invest in. The certainty provided by High Dividend Low Volatility funds means that there is still potential for growth, while avoiding the fluctuations in the valuations of individual stocks.

Tracking a FTSE Emerging Markets Index targeted at Dividend Growth, the stock, which is listed on the London Stock Exchange, is currently priced at $28.92. This price is very affordable for an entry-level investor and still attractive to those who have been investing for a while.

While being a cheaper ETF to purchase, it is one of the most expensive to hold. With an expense ratio of 0.85%, it has one of the highest ratios on this list. As such, whether you invest in this fund may depend on your own strategy. Nevertheless, it has had a 29.02% return in the last year. A popular choice for an Emerging Markets Low Volatility ETF. Find a graph of the last years performance above.

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What is a Low Volatility ETF?

A Low Volatility ETF (Exchange Traded Fund) is a fund that is designed with low fees and stability in mind. Particularly useful to investors who need stability in times when the stock market is up and down all the time, the ETFs contain, for the most part, a broad range of stocks which is meant to stabilise (and in some cases, grow) the value of their portfolio.

While some of the most popular ETFs for low volatility have a minimum amount that needs to be invested to purchase shares in these funds, the price of these particular types of assets are generally lower than $100. This makes them accessible to entry-level, beginner investors. However, they also appeal to long-time investors who may use Low Volatility ETFs to hedge against some of their more risky investments.

Are Low Volatility ETFs a Valuable Investment?

If you plan to invest for the long-term, Low Volatility ETFs are a popular option for growing your portfolio. With low expense ratios, for the most part, they are priced at levels which would allow a new investor to enter the market with little capital.

In addition, while they don’t provide the astronomic returns promised by some investing strategies, with time in the market, your portfolio will grow, particularly if you choose ETFs with dividend distributions. They also allow for diversification across sectors without the volatility of buying individual stocks from those sectors. Containing some of the world’s biggest companies, ETFs are a popular way to purchase into these without the hefty price tag on individual stocks.

Where to Purchase Low Volatility ETFs

If you choose to invest in low volatility ETFs, you may choose to do so with a reputable stock broker that offers low fees on trading, multiple asset classes to choose from and various tools & features that can assist you during your investment process.

In the sections below, we review a popular stockbrokers that let users invest in low volatility ETFs in the UK.

1. eToro

eToro
While Low Volatility ETFs are available from a number of brokers, eToro is a popular broker to get started. With commission-free ETF trading and investing, there is very little cost and the range of assets and social network like community features which provide great insight.

Being able to also copy the portfolios of other Low Volatility ETF investors allows you to make the same trades as some of the most popular investors on the platform. This, especially when you are starting your portfolio, means investors are able to learn from other users and copy their actions until they develop their own strategy. eToro is also a social trading platform that allows you to interact with other investors to discuss strategies and current trends.

Trade the best European ETFs on eToro with 0% Commission

eToro offers a huge range of different ETFs on its platform. So as well as low volatility ETFs, users have the option to invest in oil ETFs, gold ETFs and much more. eToro’s minimum deposit of just $10 means you may get started with ETF trading with very small amounts at a time.

eToro is regulated by the FCA and has over 24 million users around the world, so it’s a really trusted and secure broker. Other features include a wide range of payment methods including PayPal, reliable customer service, and a dedicated eToro mobile app.

ETF Trading Fees 0% commission + spread
Deposit Fees No (0.5% conversion for non-USD deposits)
Withdrawal Fees $5 (£4) per withdrawal
Inactivity Fees $10 (£7.60) per month after one year
Monthly Account Fees No

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How to Invest in a Low Volatility ETF

While this may depend on the broker you are using, the process is simple.

Step 1: Sign Up

Firstly, go to your chosen broker’s website and sign up. You just need to provide some basic information like your name and email to create an account.

Step 2: Deposit

You’ll then need to meet a minimum deposit amount, which will likely be accepted via credit card, debit card and PayPal.

Step 3: Search your ETF

Secondly, enter the ticker of the ETF you’d like to invest in. Next, click on the ticker and it will take you to the page of the relevant asset.

Step 4: Invest

Click on Trade and it will bring up the following screen:

Next, decide how much you’d like to purchase of the ETF. There may also be a minimum investment amount you must meet. Finally, confirm the trade to open a position in that ETF.

Conclusion

While there isn’t one perfect Low Volatility ETF, this article gives some suggestions as to where you could put your money for the greatest stability and return on investment. Varying in expense ratio, while none are outrageous, if you are looking to have minimal impact from fees, those around the 0.2-0.3% mark are a popular option.

If you wish to invest in these ETFs, it’s best to partner with an FCA-regulated broker, so that you are afforded a solid level of investor protection.

Frequently Asked Questions on Low Volatility ETFs

What is the most popular Low Volatility ETF?

What ETFs have Low Volatility?

Does Vanguard have a Low Volatility ETF?

Why might you need several of these within a portfolio?

Alan Draper author check sign Pro Investor

Alan is the Chief Editor of the Buyshares sites and is responsible for ensuring all the content on our site is accurate, relevant and helpful. He is an experienced editor who has worked for several leading online publications. Alan is also a writer and is an expert on the stock market.

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