Dividend and low volatility ETFs have been the biggest drivers of smart beta asset growth with payout funds contributing $10 billion in strategic beta assets this year, according to BlackRock.
With some investors opting to play the ongoing rally in U.S. stocks in conservative fashion, the iShares MSCI USA Minimum Volatility ETF (NYSEArca: USMV) and the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) have added a combined $1.3 billion in new assets this year as both ETFs have outperformed the S&P 500.
SPLV and USMV are up an average of 14% this year and they have an average beta against the S&P 500 of 0.69. S&P Capital IQ rates both ETFs overweight.
“While these alternatively-weighted ETFs are constructed differently, from a security and sector perspective, we think they can each reduce an investors’ risk profile while allowing them to stay in the market. Both hold stocks with above-average S&P Capital IQ Quality Rankings and generally low Qualitative Risk Assessments, according to our research supporting our top ranking,” said S&P Capital IQ in a note earlier this week. [ETF Ideas for 2015]