The iShares MSCI USA Minimum Volatility Factor ETF did what its name promises during a five-year study: it moved less than the broad U.S. market. The difficult question is whether the smoother ride justified the return investors gave up.
From October 2021 to October 2026, 24/7 Wall St. calculated USMV’s worst peak-to-trough decline at 8.91%, compared with 11.98% for the Vanguard S&P 500 ETF. Both drawdowns occurred during the same April 2025 selloff, so USMV reduced the measured decline by 3.07 percentage points.
The return gap was much larger. A $300,000 investment grew to $440,310 in USMV and $571,770 in VOO over the stated return window. Those ending values correspond to dividend-adjusted gains of 46.77% and 90.59%, respectively, leaving USMV behind by $131,460.
The arithmetic is reproducible: $300,000 multiplied by 1.4677 equals $440,310, while the same principal multiplied by 1.9059 equals $571,770. The calculation is accurate for the specified dates, but it is not a forecast and does not prove that USMV will lag by a similar amount in another cycle.
USMV’s portfolio construction explains part of the difference. The fund seeks lower volatility through a constrained optimization process rather than simply buying the least volatile stocks. During the study period it leaned more toward utilities, telecom, insurance, waste services and pharmaceuticals, while the S&P 500 benchmark carried much greater exposure to information technology.
That tradeoff becomes most valuable when lower volatility changes investor behavior. An owner who would sell during a severe decline may benefit from accepting lower upside in exchange for a portfolio that is easier to hold. An investor who can tolerate market drawdowns without changing course may find the opportunity cost too high.
One caveat is especially important: the study’s worst decline lasted only about a week. A long bear market could produce a different relative result, and the five-year period favored growth stocks. The evidence supports a narrower conclusion. USMV provided real downside moderation in the observed window, but investors paid far more in forgone gains than they saved during that single drawdown.