U.S. stocks have been hitting a series of all-time highs, but that has not derailed SPLV from participating in that upside. Like SPHQ, SPLV has outperformed the S&P year-to-date and hit a fresh all-time high Friday. [Low Volatility ETFs for Defense]
Critics assert that SPLV is a utilities ETF in disguise, but the assertion misses the mark. Remember that the ETF’s holdings are culled from the 100 S&P 500 stocks with the lowest trailing 12-month volatility. So if utilities volatility spiked and/or volatility dramatically declined in another sector, SPLV’s utilities exposure would be drop.
The utilities sector is the best performer in the S&P 500 this year, which has benefited SPLV with its 23.7% weight to the group. However, the rotation to value stocks, including industrials, has also helped SPLV. The ETF devotes 16.7% of its weight to industrial names. [Low Vol ETFs Back in Style]
“In the face of a slowdown in refinance activity and potentially soft retail activity well into 2015, quality and low volatility may be strategies to consider for your portfolio,” said Kalivas.
PowerShares S&P 500 High Quality Portfolio
