Although XRLV has a 10.5% weight to rate-sensitive consumer staples stocks, the ETF has no utilities exposure. Additionally, XRLV devotes 20.6% of its combined weight to industrial and technology stocks. Those are two of the top-performing sectors in rising rate environments.
“Improved economic growth, a tightening labor market and low energy prices all augur for an end to the Fed’s accommodative monetary policy and the potential for rising interest rates. The Fed put an end to quantitative easing last fall, and the Federal Open Markets Committee has signaled a desire to slowly start normalizing interest rates. The Taylor rule, a monetary policy rule used by some Fed watchers, indicates that the federal funds rate should be 2.50%, compared to the current target of 0.25%,” notes PowerShares.
No stock accounts for more than 1.23% of XRLV’s weight. The ETF’s annual fee is 0.25%.
PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio
