Boring stocks are on a record streak the S&P 500 has never touched

Low volatility stocks simply won’t go down.

The Invesco S&P 500 Low Volatility ETF, which offers exposure to companies that generally move less than the typical stock, hasn’t posted a daily loss since August 12.

Sixteen straight sessions without a down day is by far its longest streak since inception in 2011. For reference, going back to 1928, the S&P 500 and its predecessor indexes haven’t had a non-losing streak longer than 14 days.

The fund, known by its ticker SPLV, is up 5.3% since August 12 through September 4, compared to a gain of 3.3% for the S&P 500 over the same period. 

Despite the steadiness of its returns, this ETF had been trailing S&P 500 since the start of its non-losing streak until Tuesday, when the benchmark index suffered a more than 2% decline and SPLV inched higher.

The slow grind higher in low volatility stocks is yet another signal that investors are taking a safety-first approach amid uncertainty about the state of the US labor market as the Federal Reserve prepares to cut interest rates later this month.

Unsurprisingly, SPLV’s streak has coincided with strong gains for utilities and consumer staples stocks – two sectors the ETF has much more exposure to than the S&P 500.

Spending on the basic necessities (food and electricity) tends to be less sensitive to changes in overall economic conditions than, say, splurging on new TVs or cruises. That’s why they’re the basic necessities. 

The outperformance of low volatility stocks during a rally generally has less-than-stellar implications for the future near-term performance of the S&P 500.