7 Best Volatility ETFs Of September 2024 (2024)

The Simplify Volatility Premium ETF is a rare beast. This actively managed fund aims to deliver approximately one-fifth to three-tenths (-0.2x to -0.3x) of the inverse performance of the VIX—a popular index that measures the market’s expectations for volatility. Knowing how much volatility is heading our way can help investors minimize the impact of volatility on their portfolios.

SVOL accomplishes this goal by actively trading shares of other ETFs, Treasury securities and options in an effort to short market volatility. The fund owns longer-term U.S. Treasuries and shares of the ProShares Ultra VIX Short Term Futures ETF, and also trades options in order to protect the value of the portfolio.

The Short VIX Short-Term Futures ETF targets half of the inverse (-0.5X) of the daily returns of the S&P 500 VIX Short-Term Futures Index. The fund trades one-month CBOE VIX futures contracts, and also allocates part of its portfolio to cash.

SVXY is best for experienced investors who are looking to profit from declines in the expected volatility of the S&P 500 over the upcoming month. Daily returns tend to compound, which means performance over the long term can greatly differ from the performance of the benchmark index index.

The iPath S&P 500 VIX Mid-Term Futures ETN is an exchange-traded note that gives investors exposure to the S&P 500 VIX Mid-Term Futures Total Return Index. When there are periods of elevated price volatility in medium-term S&P 500 futures, the value of VXZ shares tend to rise, while they decline in value when medium-term market volatility is moving lower.

VXZ fund maintains a long position in intermediate VIX futures contracts, giving holders exposure to medium-term expectations for the volatility index. The fund rolls over VIX futures contracts with expirations of four, five, six and seven months.

Exchange-traded notes are debt instruments with shares that trade on the stock market like ETFs. VXZ is designed to help sophisticated investors take tactical, short-term positions on expected market volatility in the medium term. It offers no yield and the long-term value of the fund goes to zero, making it totally inappropriate to buy and hold.

The iPath S&P 500 VIX Short-Term Futures ETN is an exchange-traded note that provides exposure to the S&P 500 VIX Short-Term Futures Total Return Index. When there are periods of elevated price volatility in shorter-term S&P 500 futures, the value of VXX shares tend to rise, while they decline in value when short-term market volatility is moving lower.

VXX offers exposure to a long position in the first and second month VIX futures contracts. These derivatives indicate professional investors expectations for shorter-term moves in the VIX.

Exchange-traded notes are debt instruments with shares that trade on the stock market like ETFs. VXZ is designed to help sophisticated investors take tactical, short-term positions on expected market volatility in the medium term. It offers no yield and the long-term value of the fund goes to zero, making it totally inappropriate to buy and hold.

If you’re a fan of nimble, fast-growing small companies but would prefer less volatility with your small-cap stocks, the SPDR SSGA US Small Cap Low Volatility Index ETF might be for you. This passive index fund tracks the SSGA US Small Cap Low Volatility Index.

SMLV’s portfolio includes more than 420 of the lowest volatility stocks from the small-cap universe. These firms also tend to have lower valuations, as represented by a price-to-earnings ratio (P/E ratio) around 13. Financial stocks dominate the fund, accounting for approximately 30% of the portfolio, roughly double the weighting of the next biggest sector, industrials, followed by technology, healthcare and real estate stocks.

The Fidelity Low Volatility Factor ETF is a factor fund that screens the universe of large- and mid-cap stocks for holdings that demonstrate low-volatility earnings and price performance. It’s a good choice for investors who want to insulate their portfolio from continuing market volatility, including periodic price declines.

Holding approximately 130 stocks, FDLO’s portfolio is very concentrated. The vast majority of holdings are U.S. stocks. A very small percentage of FDLO’s holdings are sold short. There is also a tiny allocation to Switzerland and the UK. As you might expect with a low-volatility fund, FDLO outperformed the S&P 500 during the 2022 bear market. When stocks rebounded, returns were relatively close to the S&P 500.