We have seen some interesting rotation out of SPLV (PowerShares S&P 500 Low Volatility Portfolio, Expense Ratio 0.25%) with more than $700 million spilling out of the fund via redemption activity.
The timing of the redemptions is interesting given it was before today’s steep equity sell-off, as we generally see folks adding to this and related “Low Volatility” funds on bad days in the market like today but the activity is what it is. SPLV still has just shy of $5 billion in overall assets under management, and is actually a hair smaller than competing product from iShares now, USMV (iShares MSCI USA Minimum Volatility, Expense Ratio 0.15%) which has actually outpaced SPLV significantly year to date in terms of asset flows (adding >$1.28 billion via creation activity while SPLV has seen >$265 million leave the fund via redemptions).
From a sector exposure standpoint, USMV looks a bit different from SPLV even though both funds are marketed in the “Low Volatility Equity” sub-category, as its highest weightings are to Healthcare (20%), Consumer Staples (16%), Industrials (10%), and Financials (10%). On the other hand, SPLV’s top sector weightings are Financials (19%), Consumer Staples (17%), REITs (16%), and Industrials (15%).
It will be interesting to see if the global equity weakness from today lasts more than one day, if any assets return to funds like SPLV since they are as we mentioned, typically used as defensive ways to get equity exposure as opposed to higher beta strategies such as say SPHB (PowerShares S&P 500 High Beta Portfolio, Expense Ratio 0.25%).