“While they want equity exposure, they naturally are looking for lower risk and lower volatility products,” Robbie Cannon, President and Chief Executive Officer at Horizon, said in a press release. “The ETFs were designed with just that in mind, given our conviction that an actively managed portfolio of low volatility stocks can produce better risk-adjusted returns than portfolios of high volatility stocks, which translates to investors as a smoother ride in equity markets.”[related_stories]
Specifically, HUSV will start with a universe of large-cap U.S. equities while HDMV starts with a universe of large- and mid-cap developed market securities. The portfolio managers will then use historical price returns over multiple time frames to determine market volatility cycles and score securities based on the volatility. HUSV will then track 50 to 70 companies with the lowest forecasted volatility while HDMV takes 100 to 200 stocks with the lowest volatility score. Lastly, securities are weighted based on forecasted volatility scores with larger weights given to those that exhibit lower future expected volatility.
HUSV has a 21.9% tilt toward consumer staples, 21.6% industrials, 15.9% utilities, 13.7% financials, 12.7% health care, 7.6% consumer discretionary, 4.7% telecom, 1.1% energy and 0.9% tech. Top holdings include Johnson & Johnson (NYSE: JNJ) 4.3%, Waste Management (NYSE: WM) 3.6% and Lockheed Martin Corp (NYSE: LMT) 3.4%.
HDMV includes a hefty 57.7% financial tilt, along with 18.3% telecom, 6.6% industrials, 5.4% consumer staples, 4.1% utilities, 3.9% health care, 1.8% consumer discretionary, 1.2% materials and 1.0% tech. Top components include a large 30.9% in Bank Hapoalim B.M., 16.6% Beze The Israel Telecommunication Corp. and 15.9% Bank Leumi Le-Israel B.M. MAN SE.
For more information on new fund products, visit our new ETFs category.