“Whatever path you take, do not confuse low-volatility funds with no volatility. All low-volatility stock funds will still react to market swoons. And concentrating too much on defensive stocks will certainly create a drag on performance if growth still dominates. But that may not be a bad thing if you want to focus on total return over the long haul,” according to Reuters.
Earlier this month, S&P Capital rated SPLV marketweight and USMV overweight.
“While past performance is not indicative of future results and should not be the sole driver of ETF selection in our opinion, we think looking at how these two different approaches has worked in recent years is enlightening. In addition, we encourage an understanding of where the sector/country representation of each ETF,” said S&P Capital IQ in a research note. [Loving Low Vol ETFs Again]
Income investors looking to combine yield and low volatility stocks under one ETF umbrella can consider the PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD). SPHD debuted in October 2012 and now has almost $138 million in assets. Like SPLV, SPHD is utilities-heavy with a weight to that sector of almost 26%. SPHD has a trailing 12-month dividend yield of 3.45% and annual fees of 0.3%.
PowerShares S&P 500 Low Volatility Portfolio
