ETF investors seeking to capture the upside of small cap equities without the added dose of volatility can do so with the Invesco S&P SmallCap Low Volatility ETF (XSLV).
As per the fund description, XSLV seeks to track the investment results of the S&P SmallCap 600 Low Volatility Index.
The low volatility strategy also doesn’t come at a high cost. XSLV’s expense ratio comes in at just 0.25 basis points, which is 40 basis points below its category average for similar funds.
A Four-Star Rating from CFRA Research
Concern over rising rates is stagnating, which might be causing low volatility strategies like XSLV to see outflows. Nonetheless, CFRA Research still remains high on the fund, giving it a four-star rating.
“XSLV owns the historically less volatile stocks in the S&P 600 Index,” a CFRA Funds in Focus article noted. “The ETF shed $534 million of net outflows and as of June 11 had just $1.2 billion in assets. While its older and larger sister, $8.1 billion Invesco S&P 500 Low Volatility ETF (SPLV), is currently heavily weighted to defensive sectors, such as consumer staples (23% of assets) and utilities (16%), XSLV is slanted toward cyclical sectors.”
“XSLV has 20% in industrials and 19% in information technology companies, such as CSG Systems and Heartland Express,” CFRA added. “XSLV earns a four-star rating, driven in part by its low risk profile. CFRA star ratings combine fund attributes, including the performance record and key cost factors, with our proprietary holdings-level analysis.”
Large- and Mid-Cap Options
CFRA research also called out the Invesco S&P 500 Low Volatility ETF (SPLV), which now has 10 years of performance under its belt. The fund is based on the S&P 500® Low Volatility Index and seeks to invest at least 90% of its total assets in common stocks that comprise the Index, which 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.
For a mid cap option, there’s the Invesco S&P MidCap Low Volatility ETF (XMLV). The fund seeks to track the investment results of the S&P MidCap 400 Low Volatility Index.
Strictly in accordance with its procedures and mandated guidelines, the index provider selects for inclusion in the underlying index the 80 securities that it has determined have the lowest volatility over the past 12 months out of the 400 medium capitalization securities that are contained in the S&P MidCap 400 Index.
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