ETF Chart of the Day: Low Volatility, High Beta

November 10th at 11:18am by Paul Weisbruch, Street One Financial

Back in early July we featured two unique exchange traded fund products that were just starting to gather some momentum, PowerShares S&P 500 High Beta Portfolio (NYSEArca: SPHB) and PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV). [ETF Chart of the Day]

We have seen an acceleration in trading activity in both products which is not terribly surprising given the nature of both products as based on subsets of the S&P 500, and the fact that there are billions of dollars currently invested in S&P 500 Index tracking funds such as SPDR S&P 500 (NYSEArca: SPY) and iShares S&P 500 (NYSEArca: IVV).

It is very possible that fund managers are engaging in tax related swap activity and getting into either SPLV or SPHB while maintaining core exposure to the S&P 500.

Since inception, SPLV has demonstrated impressive performance versus the benchmark, down 0.32% versus the S&P 500 down 7.79%, while SPHB as we would expect (since it invests in the higher beta names of the S&P 500), has lost 26.87% during this time period.

SPLV has grown to over $600 million in assets under management, while SPHB has considerably less, $12 million in AUM currently.

We also find that SPLV has garnered some appeal from managers whom simply want to isolate and mitigate volatility from their portfolios without using VIX related ETNs or options, as 2011 has clearly been a highly volatile environment with wild swings in the marketplace and the VIX itself.

PowerShares S&P 500 Low Volatility Portfolio

For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.

Tickers

SPHB SPLV