Invesco S&P SmallCap Low Volatility ETF [XSLV] Stock Forecast

XSLV is an ETF with an aura of relative safety as it targets small-size, and, therefore, potentially better-valued U.S. stocks that exhibit low volatility characteristics. XSLV has lackluster past performance as it trailed both IVV and IJR since its inception.

Investors should consider the potential benefits of a low-volatility exchange traded fund strategy in an uncertain market environment to manage risk in their core investments.

Strategies seek to ease anxieties in uncertain times.

The three main indexes suffered their biggest monthly percentage declines in August since 2015. The weak trend is likely to continue given rising rates, recession fears, and the historical underperformance.

Just when investors and analysts thought markets were recovering from a bear market, stocks fell on Tuesday, erasing earlier gains. In a sign that market volatility isn't going anywhere anytime soon, the S&P 500 dropped 1%, while the Nasdaq Composite declined 1.9%.

The small-cap space has lately fared better than the S&P 500.

Investor fear of higher inflation, rising interest rates, and a possible recession have whipsawed markets and pushed the S&P 500 into a bear market for the first time since early in the pandemic. The S&P 500 was down about 1.6% in intraday trading after just barely avoiding bear country.

If investors are worried about volatility these days, it's because they should be. The CBOE Volatility Index or VIX for short is up over 50% this year, giving investors a heavy dose of market fluctuations.

Escalating worries about a potential Russian invasion of Ukraine coupled with the Fed rate hike plan and skyrocketing inflation are making investors jittery.

Low-volatility ETFs could be worthwhile for investors with low-risk tolerance and have the potential to outperform the broader market, especially, if the surge in coronavirus infection continues to unsettle the stock market.