Are low volatility funds a good option in turbulent markets?

Owning one or more low volatility funds is a good way to reduce portfolio risk.

It’s been a volatile year for stocks. We’ve gone from deep lows in April (a response to U.S. President Donald Trump’s tariffs) to all-time highs in the fall.

While all this was happening, we are hearing more about high stock valuations and top economists such as David Rosenberg are warning of a possible bear market in 2026.

One of the ways to reduce portfolio risk is to own one or more low-volatility funds. These invest in stocks with a low beta, which means the stock prices move less than the broad market (which has a beta of one). These funds tend to underperform when the markets are strong, but limit the downside when equities fall. This doesn’t mean they won’t lose value in a crash. But the downside shou