Learning to Love Low Vol ETFs…Again

PowerShares offers a competing product as well, the PowerShares S&P International Developed Low Volatility Portfolio (NYSEArca: IDLV). IDLV allocates a combined 51% of its weight to Canada, the U.K. and Singapore. S&P Capital IQ has marketweight ratings on EFAV and IDLV. [Global Low Volatility ETFs]

“Relative to USMV, S&P Capital IQ is more neutral on the valuation of many of the underlying stocks inside compared to those for the similar PowerShares offering, but this ETF ranks more favorably for its strong S&P Capital IQ Quality Rankings,” said the research firm.

Returns for low volatility emerging markets ETFs have been mixed as the marketweight iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEArca: EEMV) has been less bad than the iShares MSCI Emerging Markets Index (NYSEArca: EEM) while the overweight PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSEArca: EELV) has been worse.

While both EELV and EEMV have robust exposure to conservative emerging markets such as South Korea and Taiwan, those markets have betrayed their low beta reputations this year. EELV has a roughly 24% weight to Latin America, compared to less than 11% for EEMV. That is problematic in a year in which four of the 10 worst non-leveraged ETFs are Latin America funds. [Conservative Emerging Markets ETF Failing Investors]

PowerShares S&P International Developed Low Volatility Portfolio

 

Tom Lydon’s clients own shares of EFA and EEM.