Should Invesco S&P 500 Low Volatility ETF (SPLV) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Invesco S&P 500 Low Volatility ETF (SPLV) is a passively managed exchange traded fund launched on 05/05/2011.

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The fund is sponsored by Invesco. It has amassed assets over $10.06 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.14%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Utilities sector–about 25.20% of the portfolio. Consumer Staples and Healthcare round out the top three.

Looking at individual holdings, Johnson & Johnson (JNJ) accounts for about 1.24% of total assets, followed by Pepsico Inc (PEP) and Duke Energy Corp (DUK).

The top 10 holdings account for about 8.38% of total assets under management.

Performance and Risk

SPLV seeks to match the performance of the S&P 500 Low Volatility Index before fees and expenses. The S&P 500 Low Volatility Index consists of the 100 stocks from the S&P 500 Index with the lowest realized volatility over the past 12 months.

The ETF has lost about -8.04% so far this year and is down about -2.02% in the last one year (as of 11/07/2022). In the past 52-week period, it has traded between $56.92 and $69.42.

The ETF has a beta of 0.70 and standard deviation of 22.71% for the trailing three-year period, making it a medium risk choice in the space. With about 111 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Low Volatility ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPLV is an excellent option for investors seeking exposure to the Style Box – Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $287.40 billion in assets, SPDR S&P 500 ETF has $362.75 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

 

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