In the chart below, “the red line shows the performance of the S&P 500 Low Volatility Index relative to the S&P 500 Index, based on weekly closing data. When we compare the red line with the blue line, we see that the S&P 500 Low Volatility Index outperformed the S&P 500 Index during each wave of credit stress in the Eurozone,” notes PowerShares.
SPLV is not the oldest ETF out there. It turns four in May, but the ETF’s debut date of May 2011 provides for a good barometer of how the fund performs when investor anxiety is high because of European issues. In 2011, SPLV outperformed the S&P 500 as fears of a Eurozone debt contagion spike. In 2013, when some investors rushed back to Europe, SPLV lagged the benchmark U.S. index.
SPLV targets 100 of the least volatile stocks from the S&P 500 index and weights the positions inverse to volatility – the least volatile stocks have a greater weight in in the portfolio. Over the past year, SPLV, which pays a monthly dividend, has added $943.6 million in new assets, second only to the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF) among PowerShares ETFs over that period.