6 mutual funds that limit volatility


Below are six low-volatility mutual funds, as selected by Morningstar fund analyst Harry Milling. Each has either a top-rung 5-star or 4-star rating from Morningstar, based on past performance and the level of risk taken to achieve investment returns. Over the long-term, each fund has demonstrated lower volatility than its peers, based on several measures.

One of those is each fund’s low “beta.” That’s a tool to measure how risky a stock or a fund is compared with the market. The broader market itself has a beta of 1.0. A beta below that indicates a fund is less volatile than the market. So a fund with a beta of 0.8 has below-average volatility, and can be expected to rise and fall more slowly than the market. A fund with a beta of 1.2 has above-average volatility. However, betas in different market segments may be higher or lower than the beta of the broader market. So it’s a good idea to compare a fund against the beta of its market segment, rather than the overall market, as is done in the below chart.

The six funds, in alphabetical order:

(asterisk)This fund doesn’t yet have a 10-year record, so five-year data is listed on the fund’s beta.

Note: Return data through Aug. 18