Investors continue to seek protection with low-volume ETFs

Investors continue to seek protection with low-volume ETFs

Even as the fastest-growing segments of the market recovered and risk-off sentiment began to emerge in July, investors are still pouring assets into low-volatility funds, seeking protection against what may be to come.

los Invesco S&P 500 Low Volatility ETF (SPLV) has received more new money in the last four weeks than any other fund in the Invesco ETF range. SPLV has $11.5 billion in assets under management and is a preferred offering for investors looking for lower volatility stocks who believe the economy is primed for a bear market.

SPLV, which has an expense ratio of 25 basis points, has seen flows of $1.2 billion over four weeks, according to VettaFi. So far this year through August 11, the fund has received $3 billion in assets under management.

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

According to VettaFi, SPLV is one of the safest in the world of equities, as the companies included in the portfolio are very unlikely to fail unless there is an apocalyptic event in the economy. On the contrary, these stocks are unlikely to experience rapid growth as they are already quite large and have probably seen their fastest growing days in previous years, but investors are rewarded with large dividend payouts.

The fund is an ideal option for investors looking for more stability in their portfolios without such large daily movements. Additionally, SPLV is likely to outperform in a bear market and underperform the broader markets in a bull market, making it a way to bet on the country’s economic growth prospects.

Samuel Edwards
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