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Lower Risk with These 3 Smart Beta ETFs

By: ETFdb
The global stock market can be a bumpy place and it seems these days that bumpiness is coming more often than not. It seems that investors have been on edge since the end of the Great Recession. Central bank policies, poor earnings reports, debt concerns, lower economic growth, among other drivers, can cause the markets to swoon, and today, volatility is reigning supreme. And while time in the market heals all wounds, it can’t cover up all volatility issues. When it comes to performance and returns, portfolios that exhibit higher volatility and experience higher highs and lower lows can actually see lower total returns than ones that jump around less. That has to do with compounding and the loss of investment capital during the bigger downtrends. The smoother the ride your portfolio takes, the better off you’ll actually be. For straight broad index investors that fact may not provide them with much comfort. But luckily, today’s portfolios have plenty of tools to smooth volatility and lower investment risk. The latest trend of smart beta ETFs, or those that use factors to determine their portfolios, have created funds that promise to de-risk a portfolio and reduce its volatility. Here are three of the more interesting choices.
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