Third quarter results reported so far are lackluster in
most cases and disappointing in many. Adding to the woes are the
bleak guidance for the fourth quarter and beyond provided by a
large number of companies.
On the other hand, recent U.S. economic data has been largely
positive, particularly in the areas of housing and consumer
confidence. Improving macro picture and the central banks'
support will continue to make the market somewhat resilient.
And while China is showing some signs of bottoming out, the
outlook for the Euro-zone is still very cloudy. (Read:
Buy These Emerging Asia ETFs to Beat China,
Further, in view of a very close presidential race and the
looming fiscal cliff, the investors are hesitant to make any big
moves in the market. (Read:
Obama or Romney? Win with These ETFs
The market may thus continue to be volatile in the coming
weeks. The investors should therefore look at some of the
low-volatility ETFs that are ideal for such stormy markets as
these products reduce the portfolio volatility and limit the
have shown that low-volatility stocks outperform the broader
market over longer period and they consistently deliver better
Low-volatility ETFs are suitable not only for short-term but
also for longer-term as the
volatility in the financial markets
is expected to stay at elevated levels compared to historical
levels, given extraordinary macroeconomic conditions prevailing
for the past few years and unconventional monetary tools
employed by the central banks all over the world.
Thus some allocation to low-volatility stocks and ETFs in the
portfolio will be beneficial to the investors . We may however
add that these ETFs will lag the broader market in strong bull
periods. (Read; Three
Biggest Mistakes of ETF Investing
PowerShares S&P 500 Low Volatility (
SPLV tracks the S&P 500 Low Volatility Index, which
consists of 100 stocks from the S&P 500 Index with the lowest
realized volatility over the past 12 months.
ETF currently has an attractive 30 day SEC yield of 3.00%,
while it charges an expense ratio of 0.25% per year.
The fund was launched in May last year and has proved to be
extremely popular with the investors as it has already garnered
about $2.6 billion in assets. The ETF holds 100 securities
currently, mostly from the Consumer Staples (30.9%), Utilities
(29.2%) and Healthcare (14.7%) sectors. The ETF has returned
iShares MSCI USA Min Volatility (
USMV seeks to replicate the MSCI USA Minimum Volatility Index,
which is comprised of U.S. securities in the top 85% market cap
that have lower absolute volatility. The underlying index begins
with MSCI USA Index, which is a capitalization-weighted index,
and then follows a rules-based methodology to determine weights
for securities in the index.
The fund charges a very low expense ratio of 15 basis points
annually while the 30 day SEC yield is 2.66% currently. Heath
Care (17.2%), Consumer Staples (15.7%) and Information Technology
(14.4%) are the top three sectors.
The fund was launched in October last year and has attracted
$465.1 million in assets so far, which are invested in 123
securities. It has returned year-to-date.
iShares MSCI All Country World Minimum Volatility Index
ACWV is ideal for investors looking for low-volatility product
with global exposure. It tracks MSCI All Country World Minimum
Volatility Index, which is a capitalization weighted index of
securities in the developed and emerging economies that have
lower absolute volatility. The weight of the stocks in the index
is determined by a rules based methodology.
The ETF holds 264 securities which are mainly invested in
Consumer Staples (15.4%), Healthcare (14.4%) and Financials
ACWV has an expense ratio of 0.35% and a 30 day SEC yield of
3.87% currently. The fund invests about 53% of its assets in US
securities while Japan (13%) and Canada (7%) occupy the next two
spots in terms of country exposure.
The fund was launched in October last year and has collected
$639.0 million in assets so far. It has returned 10.22%
iShares MSCI Emerging Market Minimum Volatility Index (
EEMV is an ideal choice for the investors looking to
participate in the emerging markets growth while limiting their
portfolio volatility. No wonder it has proved to be one of the
most popular emerging market ETFs, since its launch in October
The ETF holds 213 securities from the Financials (25.7%),
Consumer Staples (13.7%) and Telecom (13.7%) sectors. Taiwan
(15.3%). China (13.1%) and South Korea (10.5%) are the top
countries in terms of exposure. The fund charges a low expense
ratio of 25 basis points (after contractual waiver of certain
expense through end of 2014) while the 30 day SEC yield is 3.07%.
It has rewarded the investors with an attractive 17.2% return
till date this year.
Want the latest recommendations from Zacks Investment
Research? Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
ISHARS-MS WMVIF (ACWV): ETF Research Reports
ISHARS-MS EMMV (EEMV): ETF Research Reports
POWERSH-SP5 LVP (SPLV): ETF Research Reports
ISHARS-MS US MV (USMV): ETF Research Reports
To read this article on Zacks.com click here.
Want the latest recommendations from Zacks
Investment Research? Today, you can download 7 Best Stocks for
the Next 30 Days. Click to get this free report