While we have not seen any evidence (yet) or either redemption nor creation activity in SPLV, one from the outside looking in could hypothesize that an institutional manager or managers are potentially swapping from SPLV into USMV. USMV does in fact charge only 15 bps from an expense ratio standpoint whereas SPLV carries a charge of 25 bps. That said, we re-emphasize that we are not completely certain if these were “swaps” from one ETF to the other. The more important questions for most portfolio managers will likely be “How and why are these two products different, and how do they stack up against each other head to head?”
Year to date, USMV has notably out-performed SPLV, rallying 7.75% versus 5.32%. Since inception, USMV still has displayed relative out-performance, as the ETF is up 13.52% versus SPLV rising 10.83%. SPLV tracks an S&P index methodology, that selects the 100 stocks in the S&P 500 Index that display the lowest realized volatility over the past 12 month period.
Conversely, USMV tracks a custom MSCI Index that is meant to include both Large and Mid Cap equities that have demonstrated lowest absolute risk in terms of beta and volatility measures. This said, the two funds are not exactly “apples to apples” given the mid cap exposure inherent in USMV, but since they can both be broadly characterized as “Low Vol” funds, it is worth keeping both on your radar for potential usage in similar circumstances.
iShares MSCI USA Minimum Volatility Fund
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