For Immediate Release
Chicago, IL –August 6, 2012 – Today, Zacks Investment Ideas feature highlights Features: PowerShares S&P 500 Low Volatility (SPLV), iShares MSCI USA Min Volatility (USMV) and iShares MSCI All Country World Min Volatility Index Fund (ACWV).
3 Low-Volatility ETFs for Stormy Markets
Recent market gyrations resulting from worries over global slowdown and sovereign debt problems in Europe have left the investors nervous about the safety of their portfolios.
Due to nature of the problems, it is very much likely that the markets will stay volatile at least through the end of this year. As such, many investors have been abandoning the stock markets and seeking refuge in safer assets.
Most of the “safe” assets now have rock bottom yields and many will produce negative real returns when inflation is factored in. (Read: Three Excellent Dividend ETFs for Safety and Income)
However, there are some investment products that are designed for the investors that want to avoid volatility and limit the downside in their portfolios while staying invested in equities. Low- volatility products in general have proven their ability to deliver superior risk adjusted returns historically.
Thanks to rapid growth of ETFs, the investors can simply pick from a range of low-volatility ETFs available now rather than searching for individual stocks that suit their investment objectives. (Read: Three Defensive ETFs for a Bear Market)
Low-volatility ETFs have attracted a lot of attention recently due to increased market volatility. These ETFs have handily beaten the broader markets in the recent rocky market environment as the biggest low-volatility ETF SPLV has returned 21.05% over the last one-year period versus 11.48% for SPY, the ETF tracking the broader stock market.
Further, since most of the stocks held by the low-volatility ETFs are defensive sectors’ stocks, their distribution yield is usually higher than broader markets’ yield.
The investors should however remember that low-volatility strategies are likely to underperform the broader markets in bullish environment.
PowerShares S&P 500 Low Volatility (SPLV)
SPLV tracks the S&P 500 Low Volatility Index, which consists of 100 stocks from the S&P 500 Index with the lowest realized volatility over the past 12 months.
ETF currently has a 30 day SEC yield of 2.99%, while it charges an expense ratio of 0.25% per year. (Read: Three Low Beta ETFs For The Uncertain Market)
The fund was launched in May last year and has proved to be extremely popular with the investors as it has already garnered $2.3 billion in assets. The ETF holds 98 securities currently, concentrated mostly in the Utilities (31.2%) and Consumer Staples (28.7%) sectors. The fund is however very well diversified in its holdings with securities’ weight ranging from 0.73% to 1.59%.
SPLV has a Zacks ETF Rank of 2- Buy.
iShares MSCI USA Min Volatility (USMV)
USMV seeks to replicate the MSCI USA Minimum Volatility Index, which is comprised of U.S. securities that have lower absolute volatility. The underlying index begins with MSCI USA Index, which is a capitalization-weighted index, and then follows a rules-based methodology to determine weights for securities in the index.
The fund charges a very low expense ratio of 15 basis points annually while the 30-days SEC yield is 2.48% currently. Heath Care (16.8%), Consumer Staples (15.9%) and Information Technology (14.4%) are the top three sectors.
The fund made its debut in October last year and has attracted $343.7 million in assets so far.
iShares MSCI All Country World Min Volatility Index Fund (ACWV)
ACWV is ideal for investors looking for low-volatility product with global exposure. IT tracks MSCI All Country World Minimum Volatility Index, which is a capitalization weighted index of securities in the developed and emerging economies that have lower absolute volatility. The weight of the stocks in the index is determined by a rules based methodology.
The ETF holds 264 securities which are mainly invested in Consumer Staples (15.4%), Healthcare (14.4%) and Financials (13.7%) sectors.
ACWV has an expense ratio of 0.35% and a 30 day SEC yield of 3.91% currently. The fund’ invests about 53% of its assets in US securities while Japan (13%) and Canada (7%)occupy the next two spots in terms of country exposure.
The fund was launched in October last year and has collected $453 million in assets so far.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms. It monitors more than 200,000 earnings estimates, looking for changes.
Then when changes are discovered, they’re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock picking system; the Zacks Rank, continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter Profit from the Pros. In short, it’s your steady flow of profitable ideas GUARANTEED to be worth your time. Get your free subscription to Profit from the Pros at: http://at.zacks.com/?id=7298
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339
More From Zacks.com