Investors have plenty on their plates right now, from continued geopolitical issues in the Strait of Hormuz still threatening the global economy to looming concerns about AI concentration risk. Advisors likely have clients asking questions. The ETF wrapper’s flexibility and adaptability make it a handy tool to add exposure for volatility. The low volatility ETF FDLO, for example, targets stocks that may do well even if volatility rises.

Key Takeaways:

  • Volatility hasn’t hit the highs of 2025, but it’s hard to ignore the continued impact of the U.S.-Iran conflict and a potential AI bubble.
  • The low volatility ETF FDLO offers exposure to stocks that may do well even if markets are in a downward swing.
  • The fund has returned 9.45% over the last five years, steady performance even as a tool meant to perform in down periods.

The Fidelity Low Volatility Factor ETF (FDLO) charges a 15 basis point fee to track the Fidelity U.S. Low Volatility Factor index. The fund has similar sector exposure to the broader US equity universe, which minimizes potential unintended sector bets.

That has helped the low volatility ETF perform well long term, outperforming its ETF Database Volatility Hedged Equity category average over the last five years. The strategy has returned 9.45% in that time per ETF Database compared to 6.55% for the category’s average. It has also outperformed the average over the last three years, as well.

The strategy does hold some of those big names in tech, like Microsoft (MSFT) and Apple (AAPL). It does not, however, hold Nvidia (NVDA), or some other tech names that have exploded in just the last few quarters, like Marvell Technologies (MRVL).

See more: How Active Investing Can Get More From Growth Stocks This Year

What might investors expect long term, then, from the fund? It could make for a worthy addition in the near and medium term, with volatility such an important factor to watch out for as conflict continues around the Strait of Hormuz.

But the looming situation with AI stocks poses perhaps the biggest risk. While debate as to whether the current AI situation constitutes a bubble continues, preparing portfolios for volatility may prove a shrewd move. FDLO’s low volatility ETF approach can make it a strong, straightforward tool to help do just that.

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