The buzzword for this
era is "smart".
Whenever anyone talks
about "smart", it means it is capable of adapting to the needs of its
owner.
For a
"smart" fund, that means it adapts quickly to investor behaviour. The
fund should cut more volatility and increase profits where possible.
Low or
minimum-volatility funds hold stocks that are less likely to crash when the
stock market should fail. Investors nowadays consider it as the new "rainy
day" fund compared to the issue of crashing as a whole previously.
While it picks out
blue chip companies, it picks ones that are known for their stable profits. It
uses the idea of consumer necessities fitting
for a present situation, bringing out its "smart" function.
The trouble is, even
with its low-risk trouble, if funds like these continue to become popular, it
increases in risk.
In fact, it could very
well be at risk as the Federal Reserve starts raising interest rates by the end
of 2016. A climb could mean an increase in stock value, which could mean a huge
number of sells depending on the investors' preference.
But even if the high
demand continues the stock prices would continue to skyrocket, making it
essential for investors to immediately put their money where it is right now:
at a manageable position.
