Although stock market volatility as measured by the CBOE S&P 500 VIX has bottomed near pre-financial crisis lows, interest in ETFs that minimize rollercoaster moves hasn’t slowed.
InvescoPowerShares and State Street Global Advisors (SSgA) unveiled new ETFs aimed at reducing stock market gyrations.
SSgA launched the SPDR Russell 2000 Low Volatility ETF (SMLV) and the SPDR Russell 1000 Low Volatility ETF (LGLV) while PowerShares unveiled the PowerShares S&P MidCap Low Volatility Portfolio (XMLV) and the PowerShares S&P SmallCap Low Volatility Portfolio (XSLV).
Here’s how the funds are designed:
The PowerShares S&P MidCap Low Volatility Portfolio (XMLV) is based on the S&P MidCap 400 Low Volatility Index. The benchmark tracks 80 of the least volatile stocks from the S&P MidCap 400 Index over the past 12 months. S&P weights the securities within the underlying index based upon the inverse of each security’s volatility, with the least volatile securities receiving the highest weights in the Underlying Index. S&P rebalances quarterly.
The PowerShares S&P SmallCap Low Volatility Portfolio (XSLV) is based on the S&P SmallCap 600 Low Volatility Index. This yardstick tracks 120 of the least volatile stocks from the S&P SmallCap 600 Index over the past 12 months.