PowerShares is competing against iShares and SPDR in the low-volatility ETF market space. The PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) has a 0.25% expense ratio, the iShares MSCI USA Minimum Volatility Index Fund (NYSEArca: USMV) has a 0.15% expense ratio and the SPDR Russell 1000 Low Volatility ETF (NYSEArca: LGLV) has a 0.20% expense ratio. [iShares: No, It’s Not A Minimum-Volatility ETF Bubble]
“The ETFs are not the same but I think people are viewing them in the same way,” Todd Rosenbluth, director of ETF research at S&P Capital IQ, said in the article. “Even though you shouldn’t just be choosing the cheapest one of the three … it’s reasonable to think that low-volatility [or]minimum-volatility ETFs will try to differentiate themselves on price among other things.”
Investors have shown a tendency to lean toward low-cost ETF options. According to Vanguard, equity ETFs in the lowest cost quartile with an average of 0.14% in expenses saw $152 of the $204 billion in U.S. equity ETF inflows between 2002 and 2012, whereas ETFs in the highest cost quartile with an average 0.66% in fees attracted $13 billion over the same period.
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.