Slow and Steady: Investors Favoring Dividend, Low-Volatility ETFs
August 21st 2012 at 11:21am by John Spence
The popularity of dividend and low-volatility ETFs shows many investors want a conservative strategy if they’re going to dip a toe in the stock market.
For example, Vanguard Dividend Appreciation ETF (NYSEArca: VIG) is one of the best-selling funds in 2012, raking in $1.9 billion of inflows year to date through July, according to ETF Industry Association data. [An ETF That Tracks Quality Dividend Stocks]
The iShares Dow Jones US Select Dividend (NYSEArca: DVY) has attracted $837 million and SPDR S&P Dividend (NYSEArca: SDY) has brought in $466 million.
“While the belief in the U.S. stock market has taken a hit, ETFs continue to grow. Some of the most successful launches over the past year are in low-volatility products, which buy stocks that exhibit below-average levels of price movement,” said Nicholas Colas, ConvergEx Group chief market strategist, in a note Tuesday.
PowerShares S&P 500 Low Volatility ETF (NYSEArca: SPLV) is the largest fund in this category. [Using Low-Volatility ETFs to Endure Market Swings]
“Dividend-oriented investing has also been popular,” he wrote. “Old Paradigm: ‘Widows and orphan stocks’ like utilities. New Paradigm: ‘Widows and orphans ETFs’ like emerging market dividend products and a good Min-vol fund.”
It’s not surprising that equity investors are taking a conservative approach after enduring the dot-com and subprime crashes the past decade. Dividend ETFs have also attracted investors looking to boost income in a low-interest-rate market.
Other low-volatility ETFs include:
- iShares MSCI All Country World Minimum Volatility Index Fund (NYSEArca: ACWV)
- iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSEArca: EEMV)
- iShares MSCI EAFE Minimum Volatility Index Fund (NYSEArca: EFAV)
- iShares MSCI USA Minimum Volatility Index Fund (NYSEArca: USMV)
- PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSEArca: EELV)
- PowerShares S&P International Developed Low Volatility (NYSEArca: IDLV)
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.