Invesco S&P 500 Low Volatility ETF (ARCA: SPLV)

最新ニュース Invesco S&P 500 Low Volatility ETF (ARCA:SPLV)

Invesco S&P 500 Low Volatility ETF

PowerShares S&P 500 Low Volatility Portfolio ETF

Utilities

Industrials

Financial Services

Consumer Defensive

Healthcare

Consumer Cyclical

Technology

Real Estate

Energy

Basic Materials

Communication Services

Other

The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index. Strictly in accordance with its guidelines and mandated procedures, the index provider selects 100 securities from the S&P 500 Index for inclusion in the underlying index that have the lowest realized volatility over the past 12 months as determined by S&P DJI.

Berkshire Hathaway, Inc.

Republic Services Inc

Coca-Cola Co/The

Colgate-Palmolive Co

Marsh & Mclennan Cos Inc

Walmart Ord

Johnson & Johnson

Roper Technologies Inc.

Loews Corp.

Linde Plc

Procter & Gamble Co/The

Atmos Energy Corp

Evergy Inc

Automatic Data Processing, Inc.

Consolidated Edison Inc

Brown & Brown Inc

The <a href="https://www.benzinga.com/money/momentum-trading">momentum trade</a> just hit a wall and the unwind has been nothing short of brutal.
JPMorgan analysts Dubravko Lakos-Bujas, Arun Jain and Bhupinder Singh note that the sharp reversal in momentum has erased two years of gains in just three weeks &#8211; one of the fastest unwinds in four decades. 
With mega-caps leading the drop and a dramatic shift towards low-volatility stocks, investors need to rethink their strategies.
<h2 class="wp-block-heading">What's Behind The Crash?</h2>
Extreme crowding in momentum stocks &#8211; primarily fueled by AI enthusiasm, high-rate expectations and pro-growth bets—came under pressure as macro risks resurfaced. 
The result? A 17% average decline among the Mag-7, triggering a $5.8 trillion market cap wipeout in the S&amp;P 500.
While forced liquidations and systematic deleveraging have cooled the immediate risk of another crash, JPMorgan warns that if this is a true regime shift, the unwind may only be one-third complete.
Read Also: <a href="https://www.benzinga.com//node/44450390">Charlie Munger&#8217;s Investment Wisdom: &#8216;If People Weren&#8217;t So Often Wrong, We Wouldn&#8217;t Be So Rich&#8217;</a>
<h2 class="wp-block-heading">Where Is Momentum Flowing?</h2>
Momentum is rotating away from quality growth and into low volatility and defensive plays. 
According to JPMorgan, stocks in the following sectors are seeing the strongest bid:
Utilities: NiSource Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NI#NYSE">NI</a>), Ameren Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AEE#NYSE">AEE</a>) and Evergy Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EVRG#NASDAQ">EVRG</a>)
Insurance: Arthur J. Gallagher &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AJG#NYSE">AJG</a>), Brown &amp; Brown Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BRO#NYSE">BRO</a>) and Aon PLC (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AON#NYSE">AON</a>)
Financial Services: Visa Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/V#NYSE">V</a>) and Mastercard Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MA#NYSE">MA</a>)
Crowding in low volatility names has surged, pushing relative P/E valuations to record highs.
<h2 class="wp-block-heading">What To Watch Next</h2>
<h4 class="wp-block-heading">The Low-Volatility Boom</h4>
With the iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) (small caps) lagging and defensive ETFs like the Invesco S&amp;P 500 Low Volatility ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPLV#NYSE">SPLV</a>) seeing inflows, the shift towards safety is clear. But JPMorgan warns that a further rate drop could push low volatility stocks into bubble territory, much like 2016.
<h4 class="wp-block-heading">High-Volatility Bargains</h4>
According to JPMorgan, stocks that have seen heavy multiple compression, making them attractive for value-seeking investors, include:
Semiconductors: Monolithic Power Systems Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MPWR#NASDAQ">MPWR</a>), Nvidia Corp (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) and Advanced Micro Devices Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMD#NASDAQ">AMD</a>))
Software: (Synopsys Inc (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/snps#NASDAQ">SNPS</a>), Cadence Design Systems Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CDNS#NASDAQ">CDNS</a>), ServiceNow Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NOW#NYSE">NOW</a>))
Tech Hardware: (Arista Networks Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/anet#NYSE">ANET</a>), NetApp Inc (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NTAP#NASDAQ">NTAP</a>), Dell Technologies Inc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DELL#NYSE">DELL</a>))
However, without an intra-cycle reset or Fed pivot, a broad move into beaten-down growth stocks may be premature.
<h4 class="wp-block-heading">The Fed's Next Move</h4>
If rate expectations shift lower, expect bond proxies to gain further. If not, the defensive rally may stall, forcing a reassessment of positioning.
Momentum traders just got whipsawed and the rotation into low-volatility stocks has been rapid. While some safety plays look solid, overheating risks remain.
Investors should watch for signs of a structural shift &#8211; and be ready to pivot before the next wave hits.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com//node/44456554">Trade Wars, Fed Moves And A 40% Recession Risk &#8211; Is Your Portfolio Ready?</a></li>
</ul>
Photo: Shutterstock

Analyst Color

Long Ideas

Macro Economic Events

Sector ETFs

Broad U.S. Equity ETFs

Economics

Analyst Ratings

Trading Ideas

ETFs

ANET

CDNS

DELL

EVRG

MPWR

NTAP

NVDA

SNPS

PowerShares S&P 500 Low Volatility Portfolio

SPLV

Momentum Whiplash: Where Should Investors Pivot Next?

The stock market just got a fresh jolt of turbulence, and traders are buckling up for more. Monday's rollercoaster session saw the S&amp;P 500 index wipe out a staggering $1.5 trillion in value as trade war fears reignited. 
ETFs tracking the index closed lower: the SPDR S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) closed lower by 1.75% while the Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>) and the iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) were down 1.72% on Monday close.
Related: <a href="https://www.benzinga.com/general/social-media/25/03/44098232/markets-tank-after-trump-confirms-more-tariffs-heres-what-wall-street-is-saying">Markets Tank After Trump Confirms More Tariffs: Here&#8217;s What Wall Street Is Saying</a>
With tariffs on Canada, Mexico and China ramping up, volatility is officially back in business. The VIX has surged over 33% over the past month:
<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="696" height="449" src="https://editorial-assets.benzinga.com/wp-content/uploads/2025/03/04062926/Screenshot-2025-03-04-at-4.59.09-PM.png" alt="" class="wp-image-807881" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2025/03/04062926/Screenshot-2025-03-04-at-4.59.09-PM.png 696w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/03/04062926/Screenshot-2025-03-04-at-4.59.09-PM-300x194.png 300w" sizes="(max-width: 696px) 100vw, 696px" /></figure>
Chart source: <a href="https://www.google.com/finance/quote/VIX:INDEXCBOE?sa=X&amp;ved=2ahUKEwiiwuP0qPCLAxV0Q2cHHSTZBhcQ3ecFegQIMhAX&amp;window=1M">Google Finance</a>
But for investors, chaos breeds opportunity &#8211; if you know how to play it.
<h2 class="wp-block-heading">1. The VIX Is Screaming &#8211; Use It</h2>
The Cboe Volatility Index ($VIX) is Wall Street's fear gauge, and when it spikes, traders take notice. With uncertainty surging, options-based strategies become lucrative. 
Investors can hedge against further market swings with the ProShares Ultra VIX Short-Term Futures ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/UVXY#BATS">UVXY</a>) or the iPath Series B S&amp;P 500 VIX Short-Term Futures ETN (BATS:<a class="ticker" href="https://www.benzinga.com/stock/VXX#BATS">VXX</a>). 
But beware—these are short-term tools, not long-term holds.
<h2 class="wp-block-heading">2. Play Defense With Broad Market ETFs</h2>
When markets get rocky, smart money often rotates into low-volatility and defensive plays. 
The Invesco S&amp;P 500 Low Volatility ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPLV#NYSE">SPLV</a>) offers exposure to less turbulent stocks, while the iShares MSCI USA Minimum Volatility ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/USMV#BATS">USMV</a>) helps cushion the downside. 
For those who expect more fireworks but want to stay long equities, the SPY remains a solid way to ride out the storm.
<h2 class="wp-block-heading">3. Don't Fight The Tape &#8211; Trade Trends</h2>
With uncertainty swirling, trend-following strategies gain an edge. Investors looking for short-term gains might consider the ProShares Short S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SH#NYSE">SH</a>) for bearish exposure or the ProShares UltraPro Short S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPXU#NYSE">SPXU</a>) for amplified downside bets. 
Meanwhile, gold, often a safe-haven asset, is seeing renewed interest through ETFs like SPDR Gold Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>).
With Trump hinting at more "big" announcements by Wednesday night, expect the volatility train to keep rolling. The question isn't whether markets will move &#8211; it's whether you're ready to trade the storm.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/markets/bonds/25/03/44096578/leon-cooperman-says-he-likes-cash-calls-trumps-deficit-cutting-contractionary">Leon Cooperman Says He Likes Cash, Calls Trump&#8217;s Deficit Cutting &#8216;Contractionary&#8217;</a></li>
</ul>
Image via Shutterstock

Specialty ETFs

SPXU

USMV

UVXY

Barclays Bank iPath S&P 500 VIX Short-Term Futures ETN

Tariffs, Trump, Tumult: How To Trade The Volatility Surge

Mounting global trade tensions are leading to sharp market fluctuations as investors are scrambling for ways <a href="https://www.benzinga.com/topic/trade-war">to protect their portfolios</a>. 
The U.S. has imposed tariffs on major trade partners, including Mexico, Canada, and China, leading to economic uncertainty. 
As a result, <a href="https://www.benzinga.com/etfs">ETFs have emerged</a> as a safe option for those looking to hedge against volatility while maintaining diversified exposure to various asset classes.
Also Read: <a href="https://www.benzinga.com/etfs/broad-u-s-equity-etfs/25/02/43598271/5-etfs-that-beat-market-turmoil-with-gains-last-week">5 ETFs That Beat Market Turmoil With Gains Last Week</a>
<ul>
<li>SPDR Gold Shares (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>): Gold has long been a preferred asset during market turmoil. The SPDR Gold Shares ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>) provides direct exposure to gold, which often rises with the rise of uncertainties, making it a strong hedge against economic instability. The ETF price has grown 42.88% in the past year.</li>
</ul>
<ul>
<li>Invesco S&amp;P 500 Low Volatility ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPLV#NYSE">SPLV</a>): For those who want equity exposure with reduced volatility, the Invesco S&amp;P 500 Low Volatility ETF selects stocks with historically lower price fluctuations, aiming for steadier performance. The fund boasts a 1-year price return of 13.72%.</li>
</ul>
<ul>
<li>Vanguard Consumer Staples ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VDC#NYSE">VDC</a>): Consumer staples remain resilient in uncertain economic conditions, as everyday essentials will continue to be in demand. The Vanguard Consumer Staples ETF includes key players like Procter &amp; Gamble (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PG#NYSE">PG</a>) and Coca-Cola (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KO#NYSE">KO</a>), offering a defensive strategy against economic downturns.</li>
</ul>
<h3 class="wp-block-heading">Market Turbulence from the Trade War</h3>
The recent imposition of tariffs by the U.S. on major trade partners—Mexico, Canada, and China—has injected significant uncertainty into the markets. With 25% tariffs on Canadian and Mexican imports and a 10% levy on Chinese goods, equities initially reacted negatively. Although a temporary pause on tariffs for Mexico and Canada provided a brief market recovery, it is widely believed that Trump will go ahead with the policies one day or the other.
In another step in his trade policy overhaul, Reuters reported that on Feb. 9, Trump said he will introduce fresh <a href="https://www.benzinga.com/government/regulations/25/02/43592144/us-steel-aluminum-stocks-rally-as-trump-revives-25-tariff-plan">25% tariffs </a>on all steel and aluminum imports into the U.S. These tariffs will add to the existing metals duties.
Strong retaliatory <a href="https://www.benzinga.com/news/global/25/02/43600852/china-sets-sights-on-us-tech-companies-as-trade-tensions-rise">tariffs from China</a>, and sanction plans on U.S. goods by Canada and Mexico are adding to the nail-biting situation.
Additionally, with the Fed keeping interest rates unchanged in their recent meeting led investors to lower their expectations for lower rates, throwing the market into more uncertainty.
According to the CME <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">FedWatch </a>Tool, the Fed has a 91.5% probability of keeping the rates unchanged at 4.25-4.5% in March, while there&#8217;s an 8.1% chance that the Fed cut the rate to 4%-4.25% in its March meeting.
While trade conflicts can cause market swings, investors can mitigate risks by allocating capital to ETFs that focus on keeping investors&#8217; money safe. Whether through gold, Treasuries or defensive equities, these funds offer more opportunities to diversification and manage risks as global trade policies evolve.
Read Next:<a href="https://www.benzinga.com/etfs/new-etfs/25/02/43599972/new-bitcoin-etf-limits-losses-to-20-offers-risk-controlled-exposure"> </a>
<ul>
<li><a href="https://www.benzinga.com/etfs/new-etfs/25/02/43599972/new-bitcoin-etf-limits-losses-to-20-offers-risk-controlled-exposure">New Bitcoin ETF Limits Losses To 20%, Offers Risk-Controlled Exposure</a></li>
</ul>
Photo: Shutterstock

EEMV

GOVT

As Trade War Heats Up, These ETFs Offer A Safe Harbor For Investors

On CNBC's &#8220;<a href="https://www.cnbc.com/video/2024/05/09/final-trades-live-nation-delta-air-lines-and-splv.html">Halftime Report Final Trades</a>,&#8221; Jim Lebenthal of Cerity Partners said Delta Air Lines, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DAL#NYSE">DAL</a>) just hit a <a href="https://www.benzinga.com/news/earnings/24/04/38202532/delta-air-lines-analysts-boost-their-forecasts-after-upbeat-earnings">post-pandemic high</a>.
On April 10, Delta Air Lines reported better-than-expected first-quarter earnings. The company reported a first-quarter 2024 operating revenue growth of 8% year-over-year to $13.748 billion and adjusted operating revenue of $12.563 billion (+6% YoY), beating the consensus of $12.57 billion. Adjusted EPS was 45 cents, above the consensus of 36 cents, according to data from Benzinga Pro.
Liz Young of SoFi named Invesco S&amp;P 500 Low Volatility ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPLV#NYSE">SPLV</a>) as her final trade.
Don't forget to check out our <a href="https://www.benzinga.com/premarket/">premarket coverage here</a>
Joshua Brown of Ritholtz Wealth Management picked Live Nation Entertainment, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LYV#NYSE">LYV</a>).
On May 2, Live Nation Entertainment posted first-quarter GAAP loss of 53 cents per share, compared to market estimates for a loss of 18 cents per share. The company's quarterly sales came in at $3.8 billion versus expectations of $3.259 billion. 
Redburn Atlantic analyst Ed Vyvyan upgraded Live Nation Entertainment from Neutral to Buy and raised the price target from $114 to $115 on May 9.
Price Action:
<ul>
<li>Delta Air Lines shares rose 0.9% to close at $52.75 on Thursday.</li>
<li>Invesco S&amp;P 500 Low Volatility ETF gained 0.6% during Thursday's session.</li>
<li>Live Nation Entertainment shares rose 1.3% to settle at $97.03 on Thursday.</li>
</ul>
Check This Out: <a href="https://www.benzinga.com/trading-ideas/long-ideas/24/05/38730510/over-34m-bet-on-this-industrial-stock-check-out-these-4-stocks-insiders-are-buying">Over $34M Bet On This Industrial Stock? Check Out These 4 Stocks Insiders Are Buying</a>

News

Markets

Media

Delta Air Lines, Live Nation Entertainment And More On CNBC's 'Final Trades'

CNBC Halftime Report Final Trades: Live Nation Entertainment, Delta Air Lines, Invesco S&P 500 Low Volatility ETF

On CNBC&rsquo;s &ldquo;<a href="https://www.cnbc.com/video/2022/05/16/final-trades-merck-kinder-morgan-more.html">Halftime Report Final Trades</a>,&rdquo; Liz Young of BNY Mellon Investment Management chose Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>), saying that &ldquo;we have to fight through some more bumps for the next couple of months.&rdquo;
Jim Lebenthal of Cerity Partners said Kinder Morgan Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kmi#NYSE">KMI</a>) is a &ldquo;laggard in the energy space.&rdquo; Lebenthal added that he believes the stock is &ldquo;starting to break out right here.&rdquo; Kinder Morgan offers an almost 6% dividend yield and it is &ldquo;transporting mainly natural gas, which we know is in high demand here in the USA and abroad.&rdquo;
Check out other stocks making big moves in the <a href="https://www.benzinga.com/premarket/">premarket</a>.
Joseph Terranova of Virtus Investment Partners said Merck &amp; Co., Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mrk#NYSE">MRK</a>) is &ldquo;breaking out to a multiyear high.&rdquo; He added that the stock is &ldquo;cheap on valuation basis.&rdquo;

CNBC's Final Trades: Low Volatility ETF, Kinder Morgan And This Pharma Major

CNBC&rsquo;s &quot;Fast Money: Halftime Report&quot; delivers market-moving news to investors. 
The commentary delivered by hosts of the show often moves the stocks mentioned. The information is collected and refined using <a href="https://benzinga.grsm.io/register174">Benzinga Pro&rsquo;s</a> News Tool. Benzinga Pro users can access this information by using the News tool on any workstation.
Delta Air Lines, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dal#NYSE">DAL</a>) 12:44 P.M. - The stock gained 0.24% after Steve Weiss mentioned he bought shares of Delta while acknowledging the stock is down 20% from its highs.
Final Trades: 
Merck &amp; Co., Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mrk#NYSE">MRK</a>)
Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>)
Kinder Morgan Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kmi#NYSE">KMI</a>)

Movers

4 Stocks Moved By Traders On 'Fast Money: Halftime Report'

The S&amp;P 500 is up nearly 30% from its March lows and while that&#39;s undoubtedly an impressive run in a short time frame, some investors remain chastened by the coronavirus market meltdown.
A predictable result of those apprehensions is investors looking to remain engaged with equities, but doing so defensive ideas, be it <a href="https://www.benzinga.com/trading-ideas/long-ideas/20/05/15940978/4-sector-etfs-for-may-2-to-buy-2-to-avoid">at the sector level </a>or via broad market funds with favorable volatility traits.
&ldquo;After selling off sharply in March, U.S. equities partially snapped back as investors embraced the reward potential and put aside some of the Covid-19 related risk they had concerns about just weeks earlier,&rdquo; said <a href="https://www.cfraresearch.com/">CFRA Research </a>Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Monday.
Rosenbluth upgraded a pair of exchange traded funds with defensive traits. Here&#39;s a look at that defensive duo.
Invesco S&amp;P 500 Low Volatility ETF (SPLV)
The Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>) did its job in March, performing less poorly than the S&amp;P 500. However, the fund is lagging the broader market on the way back up, but those are the breaks with low volatility ETFs.
&ldquo;In March, the $9 billion Invesco S&amp;P 500 Low Volatility ETF outperformed the declining broader market, but the fund underperformed during the April recovery,&rdquo; said Rosenbluth. &ldquo;This adds to its risk mitigation appeal, according to CFRA&rsquo;s research.&rdquo;
The analyst upgraded SPLV to a four-star rating from three stars. Fortunately, the fund&#39;s energy <a href="https://www.invesco.com/us/financial-products/etfs/product-detail?productId=ETF-SPLV">exposure is scant</a>, but it&#39;s being hamstrung by a combined 31.32% allocation to the real estate and financial services sectors.
SPLV is a collection of the 100 S&amp;P 500 members with the lowest trailing 12-month volatility.
See Also: <a href="https://www.benzinga.com/news/earnings/20/05/15951639/3-etfs-for-disney-earnings">3 ETFs For Disney Earnings</a>
John Hancock Multifactor Consumer Staples ETF (JHMS)
Among consumer staples ETFs, the John Hancock Multifactor Consumer Staples ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jhms#NYSE">JHMS</a>) often goes overlooked, but it&#39;s a credible option for investors looking for an alternative to the prosaic cap-weighted funds that dominate this category.
As its name implies, JHMS adheres to multiple factors, those being smaller cap, lower relative price, and higher profitability.
&ldquo;John Hancock Multifactor Consumer Staples ETF has just $20 million in assets, and now earns a five-star rating from CFRA due to its appealing reward/risk combination and reasonable costs,&rdquo; said Rosenbluth.
The analyst notes that JHMS is overweight Costco (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/cost#NASDAQ">COST</a>) &mdash; the fund&#39;s fourth-largest holding &mdash; relative to cap-weighted rivals and its ascension to five-star status is impressive because just a month ago, it was rated three stars.

Upgrades

COST

JHMS

2 Defensive ETFs Earn Upgrades

Stocks are enduring a predictable, though unappealing reaction to the COVID-19 outbreak. So what asset classes have investors been matriculating to?
Looking at the list of exchange traded funds that <a href="https://www.barchart.com/etfs-funds/highs-lows?timeFrame=alltime">hit all-time highs</a> on Tuesday, the group is heavily populated by fixed income funds. Add to that, gold prices have been soaring on the flight to safety trade. Over the past week, the SPDR Gold Shares (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>), the world&#39;s largest gold-backed ETF, is higher by 1.6%.
With that in mind, here are some ETFs that fit the bill as &quot;safe.&quot;
<h3>VanEck Vectors Municipal Allocation ETF (MAAX)</h3>
Municipal bonds are usually considered boring...really boring. But boring has recently been beautiful. Just look at the VanEck Vectors Municipal Allocation ETF (CBOE: MAAX), which is residing near all-time highs and is up 3.36% year-to-date while the S&amp;P 500 is off 7.15% over the past week.
MAAX, which has a 30-day SEC yield of nearly 3%, features four other VanEck municipal bond ETFs as its holdings, giving investors exposure to <a href="https://www.vaneck.com/etf/income/maax/overview">massive number of muni bonds</a> across varying credit qualities and duration exposures.
MAAX &ldquo;remains overweight both credit and duration relative to its benchmark. This positioning allows MAAX to generate a significantly higher yield than that of its benchmark with the goal of de-risking the portfolio during periods of extreme risk,&rdquo; <a href="https://www.vaneck.com/blogs/allocation/rates-fall-and-push-muni-prices-higher/">according to VanEck</a>.
See Also: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/20/02/15413460/dow-plummets-2k-points-in-2-days-heres-what-the-pros-think">Dow Plummets 2K Points In 2 Days: Here&#39;s What The Pros Think</a>
<h3>GraniteShares Gold Trust (BAR)</h3>
As noted above, gold is a popular, predictable safe-haven destination and that has been the case during the coronavirus outbreak. For the week ending Feb. 24, investors added $508.22 million to the aforementioned GLD, a total exceeded by just seven other ETFs.
Long-term investors would do well to not sleep on the GraniteShares Gold Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bar#NYSE">BAR</a>). With its annual fee of 0.17%, BAR is one of the least expensive gold ETFs in the world and offers the same upside qualities as legacy funds in this category.
This month, investors have almost $16 million to the cost-effective BAR, pumping its assets under management tally to almost $691 million.
<h3>Invesco S&amp;P 500 Low Volatility ETF (SPLV)</h3>
The Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>) and other low volatility ETFs offer safety in relative terms, meaning they should perform less poorly when markets swoon. Credit SPLV, one of the largest ETFs in this category, for doing its job as it has outperformed the S&amp;P 500 by about 210 basis points over the past week.
&ldquo;By design, Low Vol aims at protection and participation,&rdquo; <a href="https://www.indexologyblog.com/2020/02/21/protection-and-participation/">S&amp;P Dow Jones Indices said in a recent note</a>. &ldquo;A well-designed low volatility index should go down less when the market is down but also go up less when the market is up. Strong markets are the worst environments for low volatility indices, which generally underperform by the largest margin then.&rdquo;

Bonds

Commodities

MAAX

3 'Safe' ETFs If A Stock Market Correction Comes Calling

Investors have been rewarded for playing defense this year as some of the largest low volatility exchange traded funds aren&#39;t trailing the S&amp;P 500 by much while doing their jobs of being less turbulent than broader benchmarks.
Some other defensive strategies are performing well, too. That includes the Invesco Defensive Equity ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/def#NYSE">DEF</a>). The $269.5 million DEF is higher by 25.4% year to date, outperforming the major low volatility ETFs while also being less volatile than the S&amp;P 500.
DEF, which turns 13 years old next week, holds 100 stocks on an almost equal-weight basis and tracks the Invesco Defensive Equity Index.
<h3>Why It&#39;s Important </h3>
DEF&#39;s underlying index &ldquo;uses a rules-based approach to select companies that potentially have superior risk-return profiles during periods of stock market weakness while still offering the potential for gains during periods of market strength,&rdquo; <a href="https://www.invesco.com/us/financial-products/etfs/product-detail?productId=ETF-DEF">according to Invesco</a>.
Although DEF is positioned as a defensive ETF, it&#39;s overly conservative at the sector level. For example, the consumer staples, real estate and utilities sectors combine for just over 20% of DEF&#39;s weight. Alone, utilities represent over 20% of the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>).
DEF allocates nearly a third of its weight to the financial services and technology sectors, both cyclical groups, and over 28% of the fund&#39;s weight is devoted to stocks with the growth designation compared to just over 21% with the value classification.
<h3>What&#39;s Next</h3>
Assuming current performance trends hold, 2019 will mark the third time in the past four years that DEF has outperformed the two largest low volatility ETFs. The fund hit an all-time on Monday.
The fund is slightly pricier than the S&amp;P 500 in terms of valuation, but with a return on equity of almost 32%, DEF is worth the cost of admission.
Investors have added nearly $48 million to DEF this year.
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Get Rewarded For Playing Defense With This ETF

Even with the major domestic equity benchmarks soaring this year, low volatility fare, including exchange traded funds, aren&#39;t trailing by much.
For example, the popular Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>) is up about 23.10% year to date while the S&amp;P 500 is higher by 24.76%. That&#39;s not an alarming gap when considering that primary objective of low volatility ETFs is to perform less poorly when stocks falter, not capture all of the available upside in a bull market.
Investors don&#39;t seem to mind the gap. Last week, SPLV took in $702.46 million in new investments, bringing its year-to-date inflows total to $3.17 billion.
<h3>Why It&#39;s Important </h3>
As <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/08/14288757/dont-ignore-this-low-volatility-etf">has been previously noted regarding</a> low volatility ETFs, such as SPLV, these funds are sector agnostic, meaning the sectors that many investors perceive as low volatility don&#39;t always dominate the lineups in these funds. SPLV&#39;s second-largest sector weight is financial services at 22.38%, but that&#39;s poised to change to the downside following the fund&#39;s recent rebalance.
&ldquo;In its current rebalance, effective after market close November 15, 2019, more than half of the eight names that left the index came from the Financials sector, scaling back the weight in the sector by 5%,&rdquo; <a href="https://www.indexologyblog.com/2019/11/15/winning-by-losing-less/">S&amp;P Dow Jones Indices said in a recent note</a>.
SPLV&#39;s reduced exposure to financial stocks doesn&#39;t mean increased exposure to utilities and consumer staples name. Rather, the financial services weight being shed by the fund will be re-allocated among communication services and real estate fare.
<h3>What&#39;s Next</h3>
SPLV&#39;s underlying index features the S&amp;P 500 stocks with the lowest trailing 12-month volatility, but that doesn&#39;t mean financial stocks have suddenly become significantly more turbulent than they were a year ago.
&ldquo;Looking at the trailing one-year volatility for S&amp;P 500 sectors compared to three months ago, there is nothing to indicate that Financials as a group became a lot more volatile,&rdquo; S&amp;P Dow Jones said. &ldquo;The S&amp;P 500 Low Volatility Index targets low volatility at the stock level and for the latest rebalance at least, there seems to be more going on idiosyncratically than at the sector level.&rdquo;
About 42% of SPLV&#39;s holdings are classified as value stocks, so the reduced exposure to financial services names could trim the fund&#39;s value profile as well.
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Changes Afoot In A Popular Low Volatility ETF

The conversation involving low volatility exchange traded funds underscores investor&nbsp;bias for domestic large-cap stocks because that conversation is typically dominated by just two funds: the iShares Edge MSCI Min Vol U.S.A. ETF (CBOE:USMV) and the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>).
Year to date, USMV has seen inflows of $12.82 billion, a total surpassed by just one other ETF. SPLV isn&#39;t a slouch, having pulled in $2.64 billion in new assets. Bottom line: investors are loving low vol ETFs this year and some market observers are growing concerned the <a href="https://twitter.com/cfromhertz/status/1188593799536218113">trade is increasingly crowded</a>.
That may be the case and it may affirmed by the fact that SPLV and USMV aren&#39;t the only low volatility funds see significant inflows.
<h3>Why It&#39;s Important </h3>
The Invesco S&amp;P MidCap Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xmlv#NYSE">XMLV</a>), the mid-cap counterpart to the aforementioned SPLV, has been a prodigious adder of assets this year. As of Nov. 5, XMLV had $3.59 billion in assets under management, <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=XMLV">according to issuer data</a>.
Based on that figure and just over 50 dedicated mid-cap ETFs listed in the U.S., just nine members of that group are larger than XMLV.
It may be a stretch to call XMLV a crowded traded, but data confirm there&#39;s been recent enthusiasm for the fund. Over the past 90 days, investors have added $421.55 million to the low vol mid-cap ETF, a total surpassed by just <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">three other Invesco ETFs</a>, including SPLV.
Year to date, XMLV has garnered inflows of $1.40 billion, good for second-best in the Invesco stable behind only SPLV.
<h3>What&#39;s Next </h3>
Although the low volatility trade appears crowded, there are no guarantees it&#39;s ending anytime soon. Even it does, that doesn&#39;t mean severe repudiation of XMLV.
As it is, XMLV is proving to be a viable alternative to traditional, diversified mid-cap funds. Year to date, the Invesco ETF is up 21.1%, trailing the S&amp;P MidCap 400 Index by 50 basis, but the fund has been 480 basis points less volatile than the mid-cap benchmark, confirming superior risk-adjusted returns.
That may be enough to continue luring investors to XMLV.
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XMLV

With Low Volatility ETFs Being All The Rage, This One (Sort Of) Keeps Quiet

Low volatility exchange traded funds are getting plenty of attention (and assets) from investors these, but the ones on the receiving end of the most adulation are, not surprisingly, large-cap funds like the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>).
<h3>What Happened</h3>
As is often the case, low volatility or otherwise, mid-cap stocks and ETFs are going overlooked. However, snubbing mid caps is a bad idea for long-term investors and in the current environment, ignoring low volatility mid-cap stocks isn&#39;t a good idea, either. Enter the Invesco S&amp;P MidCap Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xmlv#NYSE">XMLV</a>).
XMLV is ideally suited for the highly volatile near-term scene facing riskier assets as well as being a perfect fund for long-term investors looking for mid-cap exposure. Over the past three months, XMLV is higher by 0.20% while the S&amp;P MidCap 400 Index is lower by 3.7%.
<h3>Why It&#39;s Important</h3>
XMLV, which is six and a half years old, follows the S&amp;P MidCap 400 Low Volatility Index, a collection of the 80 stocks from the S&amp;P MidCap 400 with the lowest trailing 12-month volatility, but to be precise, XMLV currently holds 78 stock.
Usually, the trade-off with low volatility ETFs <a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/05/13751714/how-you-can-ratchet-down-risk-with-these-popular-etfs">is not capturing</a> the full impact of bull markets. XMLV has bucked that trend over the past three years. While the Invesco ETF was 300 basis points less volatile than the S&amp;P MidCap 400 over that period, XMLV also outpaced the mid-cap benchmark by more than 1,400 basis points over that stretch.
XMLV offers a familiar sector view relative to its large-cap, low volatility rivals as the real estate, financial services and utilities sectors combine for about 72% of the fund&#39;s weight.
<h3>What&#39;s Next</h3>
As for what&#39;s next, it&#39;s reasonable to expect more inflows to XMLV if the market&#39;s recently volatile ways continue. Over the past 30 days, XMLV has added $193.3 million in new assets, second only to SPLV among Invesco ETFs during that span, <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">according to issuer data</a>.
Inflows to XMLV aren&#39;t new. Over the past year, the ETF has added $1.57 billion in new assets, again second only to SPLV among Invesco ETFs.
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Don't Ignore This Low Volatility ETF

Through May 13, the S&amp;P 500 was sporting a month-to-date loss of around 4 percent. A loss like that in such a small time frame often prompts investors to assess defensive strategies.
Exchange traded funds offer investors plenty of avenues <a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/05/13729637/getting-defensive-with-sector-etfs">for getting defensive</a>, whether it be at the sector level or via broader market funds.
<h3>What Happened</h3>
Some of investors&#39; favorite ETF destinations when volatility rises are low volatility funds, such as the iShares Edge MSCI Min Vol USA ETF (CBOE: USMV) and the Invesco S&amp;P Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>). With the seasonally weak period of the year for stocks here, investors may increasingly gravitate to funds such as SPLV and USMV.
&ldquo;The relatively weak performance for the S&amp;P 500 thus far in May is consistent with historical trends,&rdquo; said CFRA Research&#39;s Director of ETF &amp; Mutual Fund Research Todd Rosenbluth <a href="https://www.cfraresearch.com/">in a recent note</a> . &ldquo;According to Sam Stovall, Chief Investment Strategist at CFRA, the May-October period has been the weakest of the six months of the calendar, with the S&amp;P 500 posting an average gain of only 1.4% since 1946.&rdquo;
<h3>Why It&#39;s Important</h3>
Broadly speaking, stocks were faltering this month, but SPLV and USMV met their primary objective, which is to perform less poorly than the broader market when stocks decline. While the S&amp;P 500 was down 4 percent as of May 15, SPLV and USMV were lower by 0.70 percent and 1.60 percent, respectively.
Investors &ldquo;could use lower volatility ETFs, which tend to have higher relative weightings in defensive sectors,&rdquo; said Rosenbluth. &ldquo;However, it is important to look inside since they are not constructed the same and they are heavily reconstituted throughout the year, unlike the market-cap weighted S&amp;P 500 Index.&rdquo;
SPLV&#39;s relative durability can be traced to its significant weights to defensive sectors. As of May 14, the Invesco ETF allocated a combined <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=SPLV">44.73 percent of its</a> weight to the defensive utilities and real estate sectors. USMV devotes nearly 17 percent of its weight to utilities and real estate stocks.
<h3>What&#39;s Next</h3>
USMV has some cyclical exposure with a combined weight of over 26 percent to technology and consumer discretionary stocks, indicating SPLV might be the way to go over the near-term for highly conservative investors. CFRA has Overweight ratings on both ETFs. Over the past year, investors have added <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">$2.30 billion to SPLV</a>, making the fund the top asset gatherer among all Invesco ETFs over that period.
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How You Can Ratchet Down Risk With These Popular ETFs

One of the notable themes emerging in the world of exchange traded funds in the first quarter is investors&#39; preference for low volatility funds.
Perhaps chastened by the fourth-quarter equity market swoon, investors are pouring into ETFs that aim to reduce volatility.
<h3>What Happened</h3>
The&nbsp;iShares Edge MSCI Min Vol USA ETF (CBOE: USMV) is the largest low volatility in the U.S. and is one of this year&#39;s top asset gatherers. Investors have added $3.11 billion to USMV since the start of the year, a total surpassed by just five other U.S.-listed ETFs.
USMV, which tracks the MSCI USA Minimum Volatility (USD Optimized) Index, is rewarding investors&#39; faith. The fund is higher by 12 percent year to date.
<h3>Why It&#39;s Important</h3>
Don&#39;t forget the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>), the fund that started the low volatility ETF trend in the U.S. SPLV and USMV use different approaches to deliver investors equity exposure with less volatility.
SPLV, the oldest low volatility ETF in the U.S., follows the S&amp;P 500 Low Volatility Index, which is a collection of the 100 S&amp;P 500 components with the lowest trailing 12-month volatility. That approach, although more prosaic than USMV&#39;s methodology, is being embraced by investors.
With year-to-date inflows of just over $1 billion, SPLV recently topped the $10 billion in assets under management mark. This year, SPLV has added more new assets than any other Invesco ETF, <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/tools/flow-trend-tracker">according to data</a> from the fourth-largest U.S. ETF sponsor. Over the past year, investors have added $2.10 billion to SPLV, good for the second-best total among all Invesco ETFs.
<h3>What&#39;s Next</h3>
Though SPLV is sector agnostic, sectors with favorable volatility traits often keep those traits for extended periods of time. Said another way, SPLV is frequently heavily allocated to the utilities sector. That&#39;s the case today as the group represents over a quarter of <a href="https://www.invesco.com/portal/site/us/financial-professional/etfs/product-detail?productId=SPLV">the fund&#39;s weight</a>.
The real estate sector is SPLV&#39;s second-largest sector weight at 20.38 percent. Good news for SPLV investors: utilities and real estate are two of this year&#39;s best-performing groups. On the other hand, the risk here is obvious. If Treasury yields suddenly spike, SPLV could be vulnerable due to its rate-sensitive sector allocations.
Investors should note there&#39;s a value bias with SPLV as almost 41 percent of its holdings are considered value stocks compared to less than 13 percent being growth names.
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Investors Really Love Low Volatility ETFs This Year

When stocks swooned in the fourth quarter of 2018, investors turned to more defensive strategies, including low volatility exchange traded funds.
Those funds, including the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>), did their job, which is to perform less poorly than traditional equity benchmarks when stocks tumble.
<h3>What Happened</h3>
While SPLV and rival funds performed admirably in the last three months of 2018, renewed risk appetite in 2019 is not hindering the low volatility factor. Year-to-date, SPLV is higher by 9.41 percent and hit an all-time last Friday.
Yes, SPLV is lagging the S&amp;P 500 by 157 basis points, but it pays to remember that the primary objective of low volatility ETFs is not to capture all of the upside when stocks trend higher, but rather to provide lower downside capture when stocks falter.
<h3>Why It&#39;s Important</h3>
Low volatility strategies <a href="https://www.benzinga.com/trading-ideas/long-ideas/18/11/12728797/low-volatility-etfs-are-strutting-their-stuff-again">are sector agnostic</a>, but some sectors have long-standing reputations for being less volatile than others, so SPLV is often dominated by those groups.
&ldquo;Since the last rebalance for the S&amp;P 500 Low Volatility Index, volatility continued to increase universally across all sectors of the S&amp;P 500,&rdquo; said S&amp;P Dow Jones Indices<a href="http://www.indexologyblog.com/2019/02/15/low-volatility-index-shows-its-utility/"> in a recent note.</a> &ldquo;Among the sectors that increased the most in volatility was Information Technology, up five percentage points, while Utilities&rsquo; volatility increased the least.&rdquo;
SPLV allocates just over 42 percent of its combined weight to the utilities and real estate sectors. Those are defensive groups often prized by investors for above-average dividend yields and below-average volatility.
&ldquo;It is therefore not surprising that the low volatility index increased its weight in Utilities in the latest allocation shuffle; the sector now composes a quarter of the index,&rdquo; according to S&amp;P Dow Jones.
<h3>What&#39;s Next</h3>
Sectors believed to be defensive don&#39;t always find their way to large weights in SPLV. For example, the fund devotes just 16.83 percent of its combined weight to the health care and consumer staples sectors. Technology stocks represent 7 percent of the ETF&#39;s weight.
&ldquo;Unexpectedly, Information Technology&rsquo;s weight in the low volatility index remained more or less unchanged. This likely means that volatility levels of stocks within the sector were widely dispersed, with pockets of relative stability,&rdquo; according to S&amp;P Dow Jones.
Over the past year, investors have added $1.98 billion to SPLV, a total surpassed by just one other Invesco ETF.
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Here's What's Driving This Low Volatility ETF Higher

Through the first three quarters of 2018, the growth and momentum factors continued surging, prompting investors to rebuke conservative strategies such as low volatility. That theme came to a screeching halt in October.
&ldquo;Through the first nine months of 2018, the S&amp;P 500 climbed 11% while the S&amp;P 500 Low Volatility Index was up only 6%,&rdquo; S&amp;P Dow Jones Indices said&nbsp;<a href="http://www.indexologyblog.com/2018/11/16/the-virtues-of-slow-and-steady/">in a recent note</a>. &ldquo;Then October came and, in one month of acute volatility, the low volatility index recaptured parity with the benchmark.&rdquo;
<h3>What Happened</h3>
The S&amp;P 500 Low Volatility Index is the underlying benchmark for the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>), one of the largest exchange traded funds emphasizing the low volatility investment factor.
The aim of low volatility strategies like SPLV is not to capture all of the upside in a strong trending bull market, but rather to perform less poorly when stocks decline. That has been the case with SPLV dating back to the start of October. Monday&#39;s price action confirmed as much as SPLV lost just 0.4&nbsp;percent while the S&amp;P 500 lost 1.66 percent. SPLV is up 3.79 percent year-to-date, well ahead of the S&amp;P 500.
<h3>Why It&#39;s Important</h3>
As has <a href="https://www.benzinga.com/trading-ideas/long-ideas/18/08/12234595/this-sector-gains-prominence-in-low-vol-etfs">been previously reported</a>, SPLV isn&#39;t constrained at the sector level, but its large sector weights often remain consistent. That can be a good thing at a time when volatility is rising across sectors.
Not surprisingly, the most volatile sectors at the end of October relative to the end of July were communication services, technology and energy. SPLV devotes just 10 percent of its weight to tech stocks, has no exposure to communication services names and energy is the fund&#39;s smallest sector weight at just 1.63 percent.
The least volatile sectors &ndash; utilities and real estate &ndash; combine for over 42 percent of SPLV&#39;s weight. On a related note, just seven ETFs hit record highs Monday, one of which was a utilities ETF. The S&amp;P 500 Utilities Index is up 1 percent this month.
<h3>What&#39;s Next</h3>
Some technology names were recently dropped from SPLV, but the ETF&#39;s exposure to that sector remains high relative to the fund&#39;s historical exposure to that group.
&ldquo;A few names dropped from the Technology sector but the sector&rsquo;s current standing within the index is still fairly significant from a historical context. Real Estate continued to gain ground, now almost on par with Utilities&rsquo; weight in the index,&rdquo; according to S&amp;P Dow Jones.
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Low Volatility ETFs Are Strutting Their Stuff Again

In Hollywood, for every &ldquo;Godfather II&rdquo; or &ldquo;Avengers: Infinity War,&rdquo; there are a slew of sequels that fail to live up to the promise of the first movie or franchise installment.
The world of exchange traded funds has its fair share of dud sequels, but some notable ones as well.
<h3>What Happened</h3>
The Invesco S&amp;P 500 ex-Rate Sensitive Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xrlv#NYSE">XRLV</a>) can be considered a sequel to the popular PowerShares S&amp;P 500 Low Volatility (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>). XRLV is almost three and a half years old while the $7.35 billion SPLV, one of the largest low volatility ETFs, is more than seven years old.
While SPLV holds the 100 S&amp;P 500 components with the lowest trailing 12-month volatility, XRLV&#39;s 100 holdings feature a combination of low volatility and reduced sensitivity to rising interest rates. The Federal Reserve has boosted borrowing costs seven times since XRLV came to market.
&ldquo;To us, this highlights the appeal of the ETF as XRLV provides exposure to large-cap stocks with positive correlation to rising interest rates and with low volatility,&rdquo; said <a href="https://newpublic.cfraresearch.com/">CFRA Research</a> Director of ETF &amp; Mutual Fund Research Todd Rosenbluth in a note out Monday. &ldquo;On a three-year average annualized basis, XRLV&#39;s 15.4% return was well ahead of SPLV&#39;s 12.7%. However, the beta relative to the S&amp;P 500 index of 0.89 was higher than SPLV&#39;s 0.67.&rdquo;
<h3>Why It&#39;s Important</h3>
Worthwhile ETF sequels extend to international stocks as well. For example, the O&rsquo;Shares FTSE Europe Quality Dividend ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/oeur#NYSE">OEUR</a>) is the European answer to the well-known O&#39;Shares FTSE US Quality Dividend ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ousa#NYSE">OUSA</a>). Those ETFs debuted a month apart from each other just over three years ago.
&ldquo;OEUR has approximately $40 million in assets and follows a similar smart-beta approach as OUSA. These index-based ETFs utilize three factors: high quality, high dividend yield and low volatility,&rdquo; said Rosenbluth.
Three countries &ndash; the U.K., Switzerland and France &ndash; combine for nearly two-thirds of OEUR&#39;s geographic exposure.
<h3>What&#39;s Next</h3>
OEUR is lagging OUSA this year, though the opposite was true in 2017. As CFRA notes, OEUR&#39;s dividend yield of 3.70 percent is about 40 percent higher than the yield on its domestic counterpart.
CFRA has Overweight ratings on OUSA and XRLV.
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Dividends

OEUR

OUSA

XRLV

Some ETF Sequels Are Worth Embracing

With the Federal Reserve&#39;s plans for multiple interest rate increases widely known heading into 2018, it wouldn&#39;t have been surprising to see the rate-sensitive real estate sector lag.
Indeed, the MSCI US Investable Market Real Estate 25/50 Index is lagging the S&amp;P 500 on a year-to-date basis, but over the past six months (a period that includes a rate hike), that real estate index is up more than 13 percent.
<h3>What Happened</h3>
In theory, rate-sensitive sectors, including real estate, should see increased volatility as interest rates rise -- that hasn&#39;t been the case this year. Actually, volatility has been waning in the real estate sector, prompting increased exposure to the group for some low volatility exchange traded funds, including the Invesco S&amp;P 500 Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/splv#NYSE">SPLV</a>).
SPLV tracks the S&amp;P 500 Low Volatility Index, a collection of the 100 S&amp;P 500 members with the lowest trailing 12-month volatility. The index is rebalanced in February, May, August and November. Following the recent August rebalance, the low volatility benchmark&#39;s real estate exposure increased.
<h3>Why It&#39;s Important</h3>
&ldquo;In the latest rebalance (effective after market close Aug. 17, 2018), the S&amp;P 500 Low Volatility Index added 5% to its allocation in Real Estate, bringing the sector&rsquo;s weight to 18% (the second largest weight in the index after Utilities),&rdquo; <a href="http://www.indexologyblog.com/2018/08/17/real-estate-gains-prominence-in-the-sp-500-low-volatility-index/">said S&amp;P Dow Jones Indices</a>.
When the rebalance takes effect in SPLV, the ETF&#39;s combined exposure to the utilities and real estate sectors should be roughly 43 percent, indicating those rate-sensitive sectors have not been all that volatile as borrowing costs are climbing.
Another low volatility strategy, the Invesco S&amp;P 500 High Dividend Low Volatility ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/sphd#NYSE">SPHD</a>), also featured utilities and real estate as its top two sector weights as of Aug. 17. Those sectors combined for almost 37 percent of SPHD&#39;s weight. SPHD has traded modestly lower this year, but is gaining momentum with a third-quarter of almost 6 percent.
<h3>What&#39;s Next</h3>
&ldquo;For insight into the latest rebalance, consider the trailing one-year volatility of sectors within the S&amp;P 500,&rdquo; said S&amp;P Dow Jones. &ldquo;Volatility crept up across all sectors, by generally similar amounts. Surprisingly, despite the recent turmoil in Technology, volatility there was relatively subdued, inching up only slightly. While the Industrials sector experienced relatively more volatility compared to other sectors, the difference seemingly was not commensurate with the significant weight drop in the S&amp;P 500 Low Volatility Index.&rdquo;
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Disclosure: The author owns shares of SPHD.
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SPHD

This Sector Gains Prominence In Low Vol ETFs

There&#39;s no such thing as a free lunch in financial markets and low volatility exchange-traded funds often remind investors of just that. While low volatility funds, such as the PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>), are among the most popular smart beta strategies, popularity doesn&#39;t equate to &ldquo;risk free.&rdquo;
Among the risks that low volatility can potentially face are concentration risk at the sector level or high exposure to sectors are richly valued due to their defensive traits. Another risk, and one that&#39;s particularly relevant in the current environment is interest rate risk.
<h3>
	What Happened</h3>
SPLV follows the S&amp;P 500 Low Volatility Index, which is comprised of the 100 S&amp;P 500 with the lowest trailing <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/05/11608349/a-low-volatility-idea-for-may-from-powershares#/null">12-month volatility</a>.
&ldquo;Going back to 1991, there have been 10 non-overlapping periods of rising interest rates. This includes the most recent environment through the end of February 2018, as interest rates have been trending upwards since the summer of 2016,&rdquo; <a href="http://www.indexologyblog.com/2018/04/30/interest-rate-risk-of-low-volatility-indices/">said S&amp;P Dow Jones Indices</a>. &ldquo;The S&amp;P 500 Low Volatility Index underperformed the S&amp;P 500 in 9 of the 10 periods, with an average excess return of -8.92 percent and median excess return of -5.44 percent.&rdquo;
<h3>
	Why It&#39;s Important</h3>
The performance of low volatility ETFs in rising rate environments is important because, due to the low volatility mandate, these funds can often sport large weights to sectors that are negatively correlated to rising Treasury yields.
SPLV features no telecom exposure and allocates just 16.3 percent of its combined weight to the consumer staples and real estate sectors. The ETF&#39;s 23.7 percent weight to utilities stocks, its largest sector weight, is potentially worrisome as rates rise.
<h3>
	What&#39;s Next</h3>
S&amp;P Dow Jones points out that one of the worst periods of performance for the S&amp;P 500 Low Volatility Index was when rates rose during the late 1990s technology boom because, back then, the index had no tech exposure.
Today, SPLV features some cyclical exposure to ward off the effects of rising interest rates as financial services, industrial and technology stocks combine for about 45 percent of the fund&#39;s weight.
&ldquo;The S&amp;P 500 Low Volatility Index underperformed the benchmark 60% of the time when interest rates rose and underperformed by an average of -0.60 percent,&rdquo; said S&amp;P Dow Jones. &ldquo;Conversely, the S&amp;P 500 Low Volatility Index performed better than the benchmark when interest rates declined.&rdquo;
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