Using ETFs to capture momentum during the market's wild swings

cnbc.com:

In this article

September is living up to its reputation as a volatile month, and this creates more challenges to the Big Tech trade. But one low-volatility ETF is still betting big on it.

Alliance Bernstein is behind the AB US Low Volatility Equity ETF. According to FactSet, its top three holdings include megacap winners Microsoft, Apple and Alphabet.

«Technology touches everything that we do in most facets of our life, but there are other industries in play,» Noel Archard, the firm's global head of ETFs and investor solutions, told CNBC's "ETF Edge" this week. «So, we're continuing to see a lot of interest in investing broadly.»

For comparison, FactSet lists the top holdings for Invesco's Low Volatility ETF as stocks that are traditionally more stable: Berkshire-Hathaway, Coca-Cola and Visa.

Archard notes there's still a place for historically less volatile stocks such as consumer staples and financials. He sees them as «bumpers» that can help mitigate risk.

For example, FactSet shows that Alliance Bernstein's low-volatility ETF also includes exposure in names including Procter & Gamble and Fiserv.

«You sort of forget about volatility until it's there, and then all of a sudden it becomes very front and center,» said Archard.

The AB US Low Volatility ETF is up 16% so far this year as of Wednesday's close.

Disclaimer