|Bid||0.00 x 1000|
|Ask||0.00 x 3200|
|Day's Range||49.89 - 50.24|
|52 Week Range||44.46 - 50.42|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.25%|
If you've bitten off more risk than you can chew, a more conservative asset allocation or defensive equity fund can help. Defensive equity funds still carry equity risk, but they should hold up better than the market during downturns. Among these, iShares Edge MSCI Minimum Volatility USA ETF USMV is one of the best.
The hope is that by using these methods, the new smart beta funds will ultimately outperform market cap-weighted exchange-traded funds like the SPDR S&P 500 ETF (NYSEARCA:SPY). As the name implies, RSP is an equal-weighted, smart-beta ETF.
Among smart beta ETFs dedicated to individual investment factors, low volatility products have been popular with conservative investors based on the premise that emphasizing a low volatility strategy can help reduce a portfolio’s downside potential. The trade-off with ETFs such as the PowerShares S&P 500 Low Volatility Portfolio (SPLV) is that these funds are designed more to be less bad in bear markets than they are to capture to all of the upside during a bull market. Investors considering low volatility ETFs should be mindful of key differences in how these funds are constructed.
A version of this article was published in the May 2018 issue of Morningstar ETFInvestor. Download a complimentary copy of Morningstar ETFInvestor by visiting the website. Well-constructed low-volatility stock funds should offer better downside protection, a smoother ride, and better risk-adjusted performance than the market over the long term.
Escalating trade-war concerns have put the market’s best performing stocks under pressure during the second half of June, while the least risky have made a comeback, according to Philippe Ferreira, senior strategist at Lyxor Cross Asset Research. Defensive sectors like utilities, consumer staples, and telecom, on the other hand, had been generating better returns since mid-June after a tough start to the year.
This week, investors took a pause from geopolitics despite a historic summit between the leaders of the U.S. and North Korea, turning their attention to the ETF market.
There's no such thing as a free lunch in financial markets and low volatility exchange-traded funds often remind investors of just that. 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. SPLV follows the S&P 500 Low Volatility Index, which is comprised of the 100 S&P 500 with the lowest trailing 12-month volatility.
In the search for the best ETFs for retirement, I discovered what I first thought were really bizarre exchange-traded funds that seemed to make little sense for any portfolio. The problem was this was before I came to understand how important non-correlated investments are to any long-term diversified portfolio. Non-correlated investments are essential to your portfolio because they tamp down volatility, and therefore risk, in your portfolio.
There are tons of exchange-traded funds out there, and wading through all of them can be a challenge because so many of them are alike. However, there is a class of ETFs that are either actively managed, or what I call “quasi-actively managed.”
When you see an article about smart beta funds, the first thing that might come to your mind is what does “smart beta” mean? Its top holdings consist of oddball names like asset management group GAM Holding (OTCMKTS:GMHLF) and Aurelius Equity Opportunities (OTCMKTS:AULRF).
The conventional wisdom is that placing your life savings with a money manager is a good idea because these are the people with extensive investing experience. The sad truth is that these money managers have not been trained in how to construct a portfolio or how to measure its risk. Compliance exists for one reason: to cover the rear-ends of the investment firms so they don’t get sued.
Suppose you visit two retirement portfolio managers. The first is Joe Schmoe, CFP. The second is me. Well, not officially since I’m not a CFP, but I did create and run The Liberty Portfolio stock advisory newsletter.
Among smart beta exchange traded funds dedicated to individual investment factors, low volatility products have been popular with conservative investors based on the premise that emphasizing a low volatility ...