“Low Volatility” ETFs have certainly made their mark since inception in 2011, and we have seen funds such as USMV (iShares MSCI USA Minimum Volatility, Expense Ratio 0.15%) grow to $3.3 billion in assets under management in under two years.
In recent sessions on a strong rally in equities, predominantly led by higher beta segments of the market including Small-Caps and Emerging Markets for instance, USMV has seen notable redemption activity, losing approximately $350 million lately.
Year to date however, USMV has still net attracted $2.3 billion in new assets, which is quite impressive. Competing ETF SPLV (PowerShares S&P 500 Low Volatility, Expense Ratio 0.25%) has seen smaller outflows in recent sessions, with about $15 million trickling out.
SPLV has an impressive asset base as well, with $4.6 billion now invested in the fund.
The success of both of these funds could be in part a function of the equity environment managers have been faced with since 2011, which saw many money managers looking to lower the overall volatility of their portfolios, and if they could earn a respectable dividend yield while doing so, they would embrace the opportunity.