Another familiar similar-name-different-results scenario arrives courtesy of the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the iShares MSCI USA Minimum Volatility ETF (NYSEArca: USMV).
Both ETFs promise investors reduced volatility, but the funds deliver on that promise in varying fashion. For example, SPLV holds the 100 S&P 500 stocks with the lowest trailing 12-month volatility. USMV takes into account variance, correlation and sensitivities to risk factors. [ETFs for the Low Vol Anomaly]
Over the past 12, 24 and 36 months, SPLV and USMV have delivered noticeably different returns, the result of wildly different sector weights. For example, USMV has a 20% weight to healthcare stocks, but that sector is just 9% of SPLV’s weight. On the other hand, SPLV has a 36.3% weight to the financial services sector, a group USMV devotes 15.6% to.
Vanguard FTSE Emerging Markets ETF
Tom Lydon’s clients own shares of EEM.