“In the long run, we are all dead,” said John Maynard Keynes in his 1923 Tract on Monetary Reform, arguing for immediate action addressing short-term economic problems. The quote is sometimes used as a retort when arguments are made to focus on long-term returns despite short-term challenges. It’s a sentiment, though, that acknowledges the reality many clients face in a short-term downturn: immediate volatility is too much to bear and simply ‘staying disciplined’ and ‘focusing on the long-term’ isn’t enough for them to manage that stress. ETF issuers have noted that reality and, over recent years, the market has been saturated with products aimed at managing short-term volatility for clients.
While managing volatility is an inherently short-term goal, most investors will approach these ETFs with a medium to long-term view. The question arises, then, as to how these products perform over the longer-term. Along a spectrum of ETFs that reach from covered call option writing ETFs, to explicitly named “low-vol” ETFs, through a new class of buffer ETFs, these strategies are frequently marketed as a means of managing unforeseen pockets of volatility. Two executives, however, explained how those strategies can help advisors and clients realize value in the long-term.
“There have been really strong markets the last few years. The reality is that low vol hasn’t done as well as your beta. But what low vol remains very good at doing is limiting your downside risk,” says Trevor Cummings, VP and Director, Lead of ETF Distribution at TD Asset Management. “So if you go back to the month of April, 2025 or you look at 2022 for example, which was a lot of bad for a long time, low vol does really well in those environments when the world is, you know, approaching panic or really uncertain outcomes.”
