Investors Continue to Seek Protection with Low Vol ETFs | ETF Trends

Even as growthier segments of the market rebounded and a risk-off sentiment began to emerge in July, investors are still plowing assets into low volatility funds, looking for protection against what may be lying ahead.

The Invesco S&P 500 Low Volatility ETF (SPLV) has taken in more new money over the past four weeks than any other fund in Invesco’s range of ETFs. SPLV has $11.5 billion in assets under management and is a favored offering by investors seeking lower volatility securities believing the economy to be poised for a bear market.

SPLV, which has a 25 basis point expense ratio, has seen $1.2 billion in flows over four weeks, according to VettaFi. Year to date through August 11, the fund has taken in $3 billion in assets under management.

This ETF tracks an index consisting of some of the largest U.S.-domiciled companies. As a result, investors should think of this as a play on mega and large-cap stocks in the U.S. market. These securities are usually known as ‘Blue Chips’ and are some of the most famous and profitable companies in the country, including well-known names such as ExxonMobil, Apple, IBM, and GE. 

According to VettaFi, SPLV is one of the safest in the equity world as the companies included in the portfolio are very unlikely to go under unless there is an apocalyptic event in the economy. On the contrary, these securities are unlikely to see rapid growth as they are already pretty large and have probably seen their quickest growing days in years past, but investors are rewarded with large payouts in the form of dividends. 

The fund is an ideal choice for investors looking for more stability in their portfolios without such big daily moves. Additionally, SPLV will likely outperform in a bear market and underperform broad markets in a bull market, making it a way to bet on the economic growth prospects of the country. 

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