This comment is my take on a recent Bloomberg Article by Claire Ballentine, "Traders Ditch Defensive Quant ETFs as 2020 Turmoil Drags On". It was published on Bloomberg.com on October 28, 2020.

The article focuses on the failure of many Low Vol ETFs to keep up with the market this year in "the downturn." As a result, many of these ETFs bled assets under management (AUM).

I have an issue with the context of the headline. I also believe it could have gone deeper into its analysis, breaking it down monthly.

First issue: Nomenclature. Most "low vol" products are mechanical not "Defensive Quant." They are style ETFs that just select - sometimes indiscriminately, sometimes with an additional screen - low vol Stocks. That's just screening.

Defensive quant ETFs are engineered to hold up in defensive periods while participating at a level below market resurgences.

One example is SWAN, a product by Amplify ETFs with an index from S-Network Global Indexes and conceived of by Dan Cupkovic, CFP®. It's an ETF that I own in my retirement accounts. It promises and delivered 30% market participation.

I wish to add, somewhat covered in an article that the low vol ETFs performance suffered principally because of the precise nature of this downturn - free fall that took all, followed by a relentless but more protracted monthly recovery which restored most broad indexes to pre-CoVid crash levels.

As well documented by Jennifer Bender and the research team at State Street SPDR ETFs and others, "Smart Beta" or style ETFs are not all-weather. They outperform in some market regimes and underperform in others. It was the nature of this sharp and relentless recovery through the end of August that Low Vol / Low Beta could not keep up with the market or the runaway outperformance of the Nasdaq-100 QQQ. That is really to be expected. The fact that hedge funds loaded up on those, then dumped it is also expected since they tend to trade by "low vol" being in name rather than seeing how products are engineered.

My advice; ALWAYS READ THE FUND FACT SHEETS and see what you are buying.