![\"Source:](\"https:\/\/www.etfresearchcenter.com\/articles\/wp-content\/uploads\/2016\/09\/min-vol-AUM.png\")
Source: FactSet<\/p><\/div>\n
The last few sessions notwithstanding,\u00a0it is ironic that these funds have gained such popularity in an era when markets have been unusually tranquil. Nonetheless one question we often get is, \u201cIs the Min Vol trade too crowded?\u201d We do find some shortcomings with these funds (see Dec. 2015 ETF Advisor<\/em><\/a>), but on the specific question of whether too much money has flowed into these stocks, setting them up for a reversal, the answer is probably not.<\/p>\n As impressive as their growth has been, the assets dedicated to these strategies in only about 2.5% of all equity ETF assets. Further, while valuations of companies in the iShares MSCI USA Minimum Volatility ETF (USMV<\/strong><\/a>) have certainly gotten richer over the past five years, so too have market valuations overall. On a relative basis, USMV\u2019s forward price-to-earnings multiple has traded within a fairly narrow range of 1.06x\u20131.19x the forward P\/E for the S&P 500 (SPY<\/strong><\/a>), as shown in Figure 2. That\u2019s a premium to be sure, but fairly small and not indicative of growing or overdone enthusiasm for low volatility stocks.<\/p>\n FIGURE 2: Relative P\/E Ratio<\/strong><\/span><\/p>\n iShrs. Min Vol (USMV) vs. S&P 500 SPDR (SPY)<\/em><\/span><\/p>\n Source; ETF Research Center<\/p><\/div>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n Do you think Minimum Volatility ETF still hold appeal?<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" One of the most successful product innovations of the last few years has been the growth in minimum volatility, or \u201cMin Vol\u201d ETFs, that seek to provide market returns while lowering volatility. Assets have grown from under $1 billion at the end of 2011 to $44 billion today, a growth rate of 132% annually (Figure…<\/p>\n","protected":false},"author":2,"featured_media":144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[24],"tags":[],"class_list":["post-141","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smart-beta","description-off"],"_links":{"self":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/141","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/comments?post=141"}],"version-history":[{"count":5,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/141\/revisions"}],"predecessor-version":[{"id":151,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/posts\/141\/revisions\/151"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/media\/144"}],"wp:attachment":[{"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/media?parent=141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/categories?post=141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.etfrc.com\/articles\/index.php\/wp-json\/wp\/v2\/tags?post=141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Source;](\"https:\/\/www.etfresearchcenter.com\/articles\/wp-content\/uploads\/2016\/09\/Rel_PE_USMVvSPY.png\")