Low Volatility Stocks Unusually Inexpensive

An often-cited downside of investing in defensive sectors, such as consumer staples and utilities, is that stocks in those groups often command above-average valuation due to their attractive dividend yields and below-average volatility traits.

However, the Invesco S&P 500 Low Volatility ETF (SPLV) isn’t richly valued. In fact, the exchange traded fund is home to some stocks that fit the bill as value plays. Investors looking to offset valuation risk in portfolios that are heavily allocated to mega-cap growth stocks and funds could find it compelling.

To its credit, SPLV has gained nearly 8% year-to-date. That's an impressive showing, considering the ETF lacks exposure to glamorous mega-cap growth stocks. Plus, the fund is delivering when it comes to reduced volatility. Since the start of 2024, SPLV’s annualized volatility is 7.8%, or 340 basis points below that of the S&P 500.