Low-volatility exchange traded funds offer investors the opportunity to track securities that mitigate the potential swings that would eat away returns during quick market corrections. While one low-volatility fund has attracted the lion’s share of assets in this sub-segment, investors have various ETF options at their disposal.
When investors consider a low-volatility ETF pick, most would turn to the PowerShares S&P 500 Low Volatility ETF (NYSEArca: SPLV), the largest fund in this category with $2.4 billion in assets under management. The ETF has a 0.25% expense ratio and a 2.94% yield. [Using Low-Volatility ETFs to Endure Market Swings]
SPLV follows 100 stocks from the S&P 500 that have exhibited the lowest realized volatility in the past year. Sector allocations include consumer discretionary 5.6%, consumer staples 30.9%, enegy 1.7%, financials 1.6%, health care 14.0%, industrials 3.7%, information technology 5.2%, materials 3.3%, telecom services 4.7% and utilities 29.3%. [Slow and Steady: Investors Favoring Dividend, Low-Volatility ETFs]
Investors, though, may consider other low-volatility ETF options available, including those that offer international market exposure:
EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO) tracks the Indxx Low Volatility Emerging Markets Dividend Index, providing high income along with less volatility, compared to the MSCI Emerging Markets Index. HILO has a 0.85% expense ratio and a 5.38% yield.
It limits positions to 5% each and country exposure to a maximum 5 securities. Country allocations include Brazil 18.3%, South Africa 14.6%, China 11.1%, Malaysia 10.4%, Thailand 8.7%, Poland 5.3%, Russia 5.2%, Philippines 5.2%, Hungary 5.1% and India 4.8%. Sector allocations include Telecom 34.5%, utilities 17.2%, industrials 15.3%, consumer goods 12.7% consumer services 5.8%, financials 5.6% and oil & gas 4.8%.
iShares MSCI All Country World Minimum Volatility Index Fund (NYSEArca: ACWV) follows emerging and developed equities that have lower absolute volatility. ACWV has a 0.35% expense ratio and a 3.87% 30-day SEC yield.
Country allocations include U.S. 53.1%, Japan 12.9%, Canada 6.7%, Switzerland 5.0%, Taiwan 4.0%, Hong Kong 3.4%, U.K. 3.4%, China 2.1%, Singapore 1.9% and Malaysia 1.4%. Sector allocations include consumer staples 15.3%, health care 14.3%, financials 13.8%, consumer discretionary 11.3%, telecom 9.5%, utilities 8.5%, information tech 7.7%, industrials 7.7%, energy 6.9% and materials 4.2%.
iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSEArca: EEMV) provides exposure to global emerging market equities that show lower absolute volatility. EEMV has a 0.25% expense ratio and a 2.48% 30-day SEC yield.
Country allocations include: Taiwan 15.6%, China 12.3%, South Korea 10.2%, Malaysia 8.6%, South Africa 8.4%, Brazil 8.2%, Thailand 6.6%, Chile 6.0%, Indonesia 5.5% and Colombia 3.8%. Sector allocations include: financials 24.8%, telecom 13.5%, consumer staples 13.3%, information tech 8.7%, utilities 8.4%, energy 8.0%, materials 7.1%, industrials 5.5%, health care 5.4% and consumer discretionary 4.8%.