Barrons' Brendan Conway is trying to hit home the same message to investors that PMs have been attempting to communicate for a while now: You need some volatility in your fund to see some returns.

Conway writes that investor portfolios won't be protected or benefitted greatly by ETFs named "low volatility" or minimum volatility." Even if an investor is risk-averse, data suggests that the second least volatile quintile of S&P 500 stocks had the best results during bull markets.

Low or minimum volatility ETFs have fallen harder than the S&P 500 20 percent of the time since 1973, the research of Ned Davis Research shows, Conway reports. In a note to clients, this week Ned Davis Research report writes, "…some volatility is good."

Conway named names, picking on Invesco [profile] PowerShares S&P 500 Low Volatility Portfolio, in particular, which undershot the State Street Bank & Trust [profile] SPDR S&P 500 ETF. He also referenced BlackRock [profile] iShares MSCI USA Minimum Volatility Index but said he wasn't sure if the rule applies to global ETFs such as BlackRock [profile] iShares MSCI Emerging Markets Minimum Volatility Index Fund and BlackRock [profile] BlackRock [profile] iShares Minimum All Country World Volatility Index Fund.

To read more, click here. 

Edited by: Casey Quinlan


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