Investors worried about choppy global economic growth and debt turmoil on both sides of Atlantic have been favoring exchange traded funds tracking traditionally defensive sectors such as healthcare, consumer staples and utilities.
Standard & Poor’s equity analyst Tom Graves in a note Monday listed seven attractive equity ETFs with relatively low risk. [Investors Shift Into Defensive ETFs]
The analyst screened more than 600 stock ETFs to find funds that are rated overweight on overall ranking and risk considerations ranking from S&P Equity Research. Only ETFs with a “beta” of less than 0.7% made the cut.
“By adding the criteria of beta, we are both providing an additional measure of how volatile an ETF has been, and requiring at least a three-year performance record, since that is needed for us to have a beta score,” Graves wrote Monday. “The beta compares how volatile an ETF has been, during the recent three-year period, relative to the S&P 500 Index. A beta below 1.0 is conveying less volatility than the S&P 500.”
As of July 25, seven equity ETFs met the criteria, with most classified as sector funds:
- Consumer Staples Select Sector SPDR Fund (NYSEArca: XLP)
- Health Care Select Sector SPDR Fund (NYSEArca: XLV)
- iShares Dow Jones U.S. Pharmaceutical Index Fund (NYSEArca: IHE)
- Utilities Select Sector SPDR Fund (NYSEArca: XLU)
- Vanguard Consumer Staples ETF (NYSEArca: VDC)
- Vanguard Utilities ETF (NYSEArca: VPU)
- WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ)
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.