On the other hand, SPLV includes a large 22.3% position in consumer staples, along with 16.5% industrials and 13.9% utilities, which are all in the green this year.
While USMV also includes heavy tilts toward financials, health care and information technology, the underlying index’s “optimization-based approach” has helped the fund take advantage of the correlation between stocks to design a low-vol strategy.
ETF investors browsing low-vol U.S. equity strategies may also consider a number of options.
For instance, the SPDR Russell 1000 Low Volatility Focus ETF (NYSEArca: ONEV) tracks large-cap U.S. stocks that demonstrate a combination of high value, high quality and low size characteristics, with a focus on low volatility. ONEV is up 5.5% year-to-date.
The Compass EMP U.S. 500 Volatility Weighted Index ETF (NasdaqGM: CFA) consists of 500 of the largest U.S. stocks with consistent positive earnings, which are then weighted base don their standard deviation or volatility over the past 180 trading days. CFA is 4.2% higher year-to-date.
The Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSEarca: GSLC) screens for the low-volatility, along with common investment factors like value, momentum, and quality. GSLC rose 1.7% year-to-date.
The ALPS Sector Low Volatility ETF (NYSEArca: SLOW) does bring something new to the low volatility ETF table. SLOW’s underlying S-Network Sector Low Volatility Index applies equal weighting not once, but twice, so the holdings are equally weighted on an individual basis and at the sector level. Components are also taken from the S&P 500. SLOW increased 6.4% year-to-date.
The Legg Mason Low Volatility High Dividend ETF (NasdaqGM: LVHD) selects U.S. equity stocks with low earnings volatility, along with relatively high yield and low prices, and the fund only selects profitable companies. LVHD increased 9.6% year-to-date.