Market volatility last week was the highest it has been in 2025. While it sent a portion of investors heading for the exits, many more looked to shift assets from large-cap technology stocks and cap-weighted ETFs into less volatile investments. For example, low beta stocks and low beta ETFs have seen increased interest as investors seek safer harbors amidst the turbulence.
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For those who have yet to be indoctrinated in Modern Portfolio Theory, beta quantifies the stock’s volatility relative to the market. It is a statistical measure that compares the movement of an individual stock to those of a broad market index, like the S&P 500.
A beta value of 1 indicates that the stock’s price tends to move with the market. If the market goes up by 1%, the stock is also likely to rise by 1%. Conversely, if the market falls by 1%, the stock is expected to decline by 1% as well. A beta of 1.50 suggests that the stock is more volatile than the market. It might go up by 1.5% when the market rises by 1%, and fall by 1.5% when the market declines by 1%. The reverse is true for stocks with low betas such as 0.50. Therefore, investors that wish to reduce exposure to extreme stock market volatility while remaining invested can do so with low beta stocks and ETFs.
The winds of change motivated me to find the least volatile 5-rated (Strong Buy) stocks of US=domiciled companies with market cap above $20 billion. Using ValuEngine’s screening tools, I found 7 stocks that satisfy this criteria. They include:
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Altria Group (MO) is a major American corporation and one of the world’s largest producers and marketers of tobacco, cigarettes, and related products.
Newmont Corporation (NEM) is one of the world’s largest gold mining companies involved in the production and exploration of gold and copper properties, primarily in the United States, Australia, Peru, Ghana, and Suriname.
ResMed Inc. (RMD) is a global medical device company that develops, manufactures, and markets products for the diagnosis, treatment, and management of respiratory disorders, with a focus on sleep apnea.
Take-Two Interactive Software, Inc. (TTWO )is an American video game company known for publishing and developing interactive entertainment software, including video games, through its labels Rockstar Games, Zynga and 2k.
Dominion Energy, Inc. (D) is a utility company that provides electricity and natural gas to customers in parts of the United States. The company is involved in power generation, transmission and distribution, as well as natural gas storage and distribution.
M&T Bank Corporation( (MTB) is a regional financial services company providing banking products and services in the United States.
Next Era Energy (NEE) is one of the largest electric power companies in North America, focusing on Renewable energy and energy efficiency.
Below is a table comparing these 5-rated Strong Buy stocks in order of ascending beta.
| Ticker | Company Name | Sector Name | Market Cap ($Bil) | Beta | Price | VE Rating | One Yr Gain/Loss | One Yr Forecast | Div. Yield |
| NEM | NEWMONT CORP | Basic Materials | 48.5 | 0.56 | 43.87 | 5 | 29% | 22% | 2.3% |
| NEE | NEXTERA ENERGY | Utilities | 150.9 | 0.57 | 72.83 | 5 | 29% | 17% | 3.1% |
| D | DOMINION ENERGY | Utilities | 47.2 | 0.58 | 55.22 | 5 | 15% | 15% | 4.8% |
| MO | ALTRIA GROUP | Consumer Staples | 98.0 | 0.61 | 57.79 | 5 | 39% | 14% | 7.1% |
| MTB | M&T BANK CORP | Finance | 28.1 | 0.73 | 178.74 | 5 | 25% | 14% | 3.0% |
| RMD | RESMED INC | Medical | 33.3 | 0.74 | 232.44 | 5 | 21% | 15% | 0.9% |
| TTWO | TAKE-TWO INTER | Consumer Discretion | 35.8 | 0.82 | 204.33 | 5 | 41% | 19% | 0.0% |
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Newmont Corp, (NEM) along with the others mentioned, has a beta considerably less than 1.00. Hence, its price rises and falls in conjunction with moves by the S&P 500 Index but to a lesser degree than the average stock. The first four stocks in this category have very similar betas, with little statistical difference between 0.56 and 0.58. All qualify as stocks with very low betas. Not surprisingly, one is a mining stock and two are utilities.
Newmont also has the highest one year forecast for gain. Tobacco giant Altria (MO) has the best 12-month price return. Six of the seven stocks, all but utility Dominion Energy (D), topped the S&P 500’s return of 18.4%. MO also has the highest dividend yield by a wide margin. Five of the seven stocks have dividend yields higher than that of the S&P 500 ETFs.
Beyond individual stocks, there are 26 non-leveraged ETFs classified as low volatility by ETF Database, a VettaFi company. Low-volatility ETFs are a great deal to re-allocate risky assets during projected high-volatility periods to protect against massive downward price pressure.
We next compare the top three low-volatility ETFs with each other and S&P 500 ETF SPLG. We use SPLG whenever possible because it has the lowest fee of the S&P index ETFs, just 2 basis points or 0.02%.
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iShares MSCI USA Min Vol Factor ETF (USMV) seeks to track the investment results of an index composed of U.S. equities that, measured together as a portfolio, have the lowest possible volatility relative to the broader U.S. equity market.
Invesco S&P 500 Low Volatility ETF (SPLV) selects only from stocks in the S&P 500. The sole criterion is lowest volatility as measured by standard deviation of weekly price changes.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) tracks an index of 50 stocks from the S&P 500 index that have historically provided high dividend yields and lower volatility compared to other stocks in the S&P 500. Interestingly, its holdings’ positions are weighted by dividend yield rather than market cap. In other words, most index ETFs linked to S&P 500-derived indexes are weighted by market cap. But this one seeks to deliver the highest possible dividend yield. Hence SPHD uses this unusual methodology.
SPDR Portfolio S&P 500 ETF (SPLG) is utilized in lieu of the much larger ETFs SPY and VOO because it delivers the same result at the lowest available expense ratio.
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| USMV | SPLV | SPHD | SPLG | |
| Name | iShares MSCI USA Min Vol Factor ETF | Invesco S&P 500® Low Volatility ETF | Invesco S&P 500® High Dividend Low Volatility ETF | SPDR Portfolio S&P 500 ETF |
| ValuEngine Rating | 4 | 4 | 5 | 3 |
| Price | 91.85 | 72.85 | 49.59 | 66.20 |
| Assets( $ Bil) | 23.8 | 7.7 | 3.5 | 64.9 |
| Avg. Daily Volume ($Mil) | 1.8 | 1.7 | 0.6 | 5.6 |
| 1 Month Returns | 1.3% | 1.1% | 1.8% | -1.3% |
| YTD Price Change | 3.5% | 4.4% | 3.2% | 1.4% |
| 1 Year Returns | 13.4% | 14.3% | 17.9% | 18.4% |
| 3 Year Returns | 9.5% | 6.9% | 7.2% | 12.5% |
| 5 Year Returns | 10.0% | 8.0% | 11.1% | 15.3% |
| Annual Dividend Yield % | 1.6% | 1.7% | 3.2% | 1.4% |
| Dividend Frequency | Quarterly | Monthly | Monthly | Quarterly |
| Standard Deviation | 12.2% | 16.2% | 11.6% | 17.7% |
| P/E Ratio | 21.2 | 19.2 | 13.3 | 24.9 |
| Beta | 0.75 | 0.69 | 0.85 | 1.00 |
| ER | 0.15% | 0.25% | 0.30% | 0.02% |
| Inception | 10/18/2011 | 5/5/2011 | 10/18/2012 | 12/8/2005 |
Current ValuEngine reports on all covered stocks and ETFS can be viewed HERE
The three low vol ETF provide lower standard deviation and price change volatility results than SPLG based upon the S&P 500 Index. We also see that in the most recent month, all three low-volatility ETFs were up while SPLG was down. It seems by taking these observations together that these low volatility ETFs have performed in line with what investors should have reasonably expected. All three supply somewhat higher dividend yield. Notably, SPHD, the ETF constructed to deliver both high dividends and low volatility, accomplished both. It had a 50% lower standard deviation than SPLG with a robust dividend yield of 3.2%, more than twice that of the benchmark ETF. It also had, by far, the lowest P/E multiple of any of the ETFs in the study. SPHD also delivered the top 1-month, 1-year and 5-year price gains of any of the four ETFs. A final advantage of SPHD over USLV and SPLG for income investors is that it issues dividends monthly rather than quarterly. The only contest it loses among the ETFs in this study is that it has the highest expense ratio at 30 basis points (0.30%). In this case, SPHD more than earned the differences in expense ratios for its investors.
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The conclusion I draw from this study is that low-price-volatility stocks make sense as a temporary shift in allocation from cap-weighted index funds during what almost all interviewed experts seem to be currently predicting: a high market volatility environment. On the ETF side, SPHD has been the ETF that has executed this strategy best for its investors with the bonus of a much higher income stream. Therefore, the stocks in this study listed above and SPHD are excellent starting points to investigate and consider for investors looking to lower cap-weighted allocations while staying invested in equities. Given that outlook, I also offer two sentences of caution. Shifting from market-cap weighting or equity-manager-weighting to low-volatility ETFs is a form of market timing which, generally speaking, has lost investors more money than it has saved them over the years. Remember, the fact is that being 100% invested for every 20-year period since 1926 has been the best investment strategy relative to bonds and cash. So, shifting means you risk getting back in too late to catch up with the outperformance you missed. Obviously, investment decisions are always trade-offs.
The purpose of this study was to test whether switching to low-volatility stocks and ETFs made empirical sense during times investors perceive as especially dangerous. For the past five years, the answer has been yes.
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By Herbert Blank
Senior Quantitative Analyst, ValuEngine Inc
www.ValuEngine.com
support@ValuEngine.com
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