One of the high-beta funds that debuted in May is the PowerShares S&P 500 High Beta ETF (NYSEArca: SPHB). The idea of the fund is to give investors an easy investment alternative to gain exposure to volatile, high-beta stocks which perform well in growing markets. Of course, it could underperform when the stock market is weak. [New Beta Volatility ETFs From PowerShares]
“Beta is a measure of both risk and market sensitivity, so it captures both correlation to the market and its proportional risk. As such, in a rising market, high-beta stocks outperform, and in a falling market, they underperform,” Morningstar says in an analyst report on the ETF. However, it notes high-beta stocks have historically lagged the market on a risk-adjusted basis.
PowerShares S&P 500 Low Volatility ETF (NYSEArca: SPLV) maintains the opposite goal of SPHB, and was a winner among the new ETFs last year in terms of asset gathering. The fund could appeal to investors seeking a more conservative strategy for equities. [Meet 2012’s New ETFs]
Tisha Guerrero contributed to this article.