Bond yields couldn’t stay low forever, and with rising yields, ETF investors can counteract the effect with funds like the Invesco S&P 500 Low Volatility ETF (SPLV). SPLV comes with a low 0.25% expense ratio.
“For months in this fresh bull market, we’ve been wrestling between optimism and pessimism thanks to a pandemic and economic crisis,” a Forbes article said. “But now, with rising bond yields, we finally have reason to become concerned — especially with high-growth companies. Higher yields = less attractive stocks.”
Rising yields also have an effect on loans, essentially the cost of money. Higher yields can translate to ‘more expensive’ money.
“It also means that the cost of borrowing will be higher now,” the article added. “Sure, it’s a blessing in disguise. It means there is pent-up consumer activity, and it also means that we could be getting back to normal sooner than we realize. But it also means that inflation could be just around the corner — especially if the Fed keeps rates this low. Time will tell what happens in the short-term, but we’ve put together a list of trending ETFs this week that can help you diversify your portfolio and potentially mitigate these risks.”
SPLV seeks to invest at least 90% of its total assets in common stocks that comprise the Index. The Index is compiled, maintained, and calculated by Standard and Poor’s and consists of the 100 stocks from the SP 500 Index with the lowest realized volatility over the past 12 months.
Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations over time. The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August, and November.
A List of Top ETFs?
The Forbes article also listed top ETFs to consider in the current rising yield environment. SPLV made the list, giving investors an alternative mechanism to help stave off future market volatility.
“The Invesco S&P 500 Low Volatility ETF SPLV is our final Top Buy this week,” the article said. “This ETF aims to provide investors with an index of low volatility S&P 500 stocks. Invesco chooses 100 securities from the S&P 500 that have experienced the lowest volatility over the past 12 months.”
“The ETF is on the smaller side with $8,068,546,394.29 AUM,” it added. “It has seen consistently positive fund flows, with a 90-day fund flow of $212,232,386.50, 30-day fund flow of $464,474,171.10, and 1-week fund flow of $591,638,095.70. The ETF also has a decent net expense ratio of 0.25%.”
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