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The Zacks Analyst Blog Highlights: USMV and SPLV

Zacks Equity Research

For Immediate Release

Chicago, IL –August 9, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: iShares Edge MSCI Min Vol USA ETF USMV and Invesco S&P 500 Low Volatility ETF SPLV.

Here are highlights from Thursday’s Analyst Blog:

Low Volatility ETFs for Turbulent Times

Investors have been pouring a lot of money into low volatility ETFs that tend to perform well in a volatile market environment. And volatility is expected to stay at elevated levels in the coming weeks with rising trade tensions and slowing global growth. These ETFs underperform the broader indexes during strong bull markets but hold up relatively well during market declines.

According to traditional finance theories, investors demand a higher rate of return for taking on greater risks but academic studies show that lower risk stocks have rewarded investors with higher risk-adjusted returns than the broader markets over longer-term. 

Low-volatility anomaly was overserved in almost all stock markets around the globe. Investors tend to chase hot, riskier stocks, and ignore low-risk, cheap stocks and thus misprice risk.

The two most popular low volatility ETFs--iShares Edge MSCI Min Vol USA ETF (USMV) and Invesco S&P 500 Low Volatility ETF (SPLV) —take different approaches in selecting their holdings.

USMV holds stocks that, in the aggregate, have lower volatility compared to the broader market. It takes into consideration correlation between stocks in addition to volatility. SPLV selects 100 stocks from the S&P 500 index that have the lowest realized volatility in the past 12 months and weights them according to their volatility.

USMV’s top holdings include Newmont Mining, Waste Management, McDonald's, and Visa. SPLV’s top holdings are Republic Services and NextEra Energy.

Both these ETFs have performed remarkably well relative to the broader market this year as well as in the past five years.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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iShares Edge MSCI Min Vol USA ETF (USMV): ETF Research Reports
 
Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports
 
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