How Low-Volatility Indices and ETFs Work: S&P

ETF Trends

ETF Trends Editor Tom Lydon sits down with Craig Lazzara, Vice President, U.S. Equity and Real Estate at S&P Dow Jones Indices, to discuss the popularity of “low-volatility” benchmarks.

PowerShares S&P 500 Low Volatility Portfolio (SPLV) is the oldest and largest low-volatility ETF with nearly $3 billion in assets. [More Low-Volatility ETFs]

Lazzara talks about the challenge of designing indices for ETF providers to help them introduce new and different funds in a hyper-competitive business.

He classifies low-volatility benchmarks in the third generation of ETF indices that focus on market factors or strategies. The first generation were market cap-weighted indices that cover entire asset classes, such as the S&P 500. The second generation were subsets targeting mid- and small-cap stocks, styles such as growth and value, and market sectors, Lazzara explains.

Watch the video to see the full interview.

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