Temper Q4 Market Movements With a Low Volatility ETF

The fourth quarter of 2025 may bring high hopes of a year-end rally to end the year. However, ongoing market uncertainty could make it a bumpy ride to the finish. To counter any potential volatility spikes, consider complementing a portfolio with an ETF like the Fidelity Low Volatility Factor ETF (FDLO).

Tariffs, geopolitical risks, and easing monetary policy are contributing factors that could make for another quarter marked by uncertainty. Another rising concern is that stock valuations in certain names may be reaching an apex. The AI-driven tech boom has driven much of the year’s returns.

“There are certainly some risks to the outlook right now,” noted Morningstar Senior Markets Reporter Sarah Hansen. “One of the things that investors have been really worried about this year, all year, actually is high valuations. So when stocks are fairly valued or highly valued, as is the case with many of those big tech stocks right now, there is a lot less wiggle room for them to recover from unexpected shocks, either to the corporate outlook or to the economy as a whole or on the policy side.

One way to counter any forthcoming volatility is to build a portfolio of individual stocks that exhibit low-volatility characteristics. An easier way is to simply invest in a fund that includes these names in a cost-efficient ETF wrapper like FDLO.

1 Fund for Low Volatility Exposure

A fund like FDLO also eliminates the concentration risk associated with investing in individual stocks. As mentioned, it provides a cost-effective solution given its low expense ratio of 16 basis points or $16 per every $10,000 invested.

Per its baseline fund description, the fund tracks the performance of the Fidelity U.S. Low Volatility Factor Index. Investors essentially get exposure to stocks of large and mid-capitalization U.S. companies that carry lower volatility risks versus the broader market. Taking a closer look at its holdings (as of September 16), the fund has 127 holdings for added diversification. Holdings include members of the Magnificent Seven like Microsoft, Apple, Amazon, and Alphabet. FDLO may potentially be able to help capture upside in these large cap growth names as well as defend against volatility and mitigating losses during market drawdowns.

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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.

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