We typically look for interesting developments in the ETF world in terms of uncovered, unrecognized products, or compelling ETF options trading trends or even just money flows that are out of the ordinary in this column.
In the past two sessions, a relative newcomer to the ETF space has suddenly garnered a ton of institutional assets, and in short order: iShares MSCI USA Minimum Volatility Fund (NYSEArca: USMV).
The fund, which debuted just last October of 2011, has suddenly grown to nearly a $200 million ETF after Tuesday’s trading session where more than 3 million shares exchanged hands. Typically, this ETF only averages approximately 113,000 shares traded per day. The activity itself is not terribly stunning simply because we observed and pointed out in the recent past, an institutional appetite for “Low Volatility” ETFs.
We believe that most portfolio managers are having a hard time looking past last summer’s steep sell-off, and although they likely want to be “invested” in equities to some degree, they also have scarred memories of the carnage that occurred from August to October of last year, and a strategy that provides a lower beta to the “market” itself, is quite appealing these days. [How to Use Low-Volatility Funds]
Thus, another entry in this “Low Vol” or “Low Beta” category is PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV), which has become quite a successful fund in terms of attracting assets, and in a considerably short amount of time. The ETF launched in May of 2011, and it has already raised about $2 billion in assets under management. In fact, we point out that the same day that USMV caught our attention in terms of increased trading volume, SPLV also traded several million shares, a huge multiple of the typical daily trading volume.