Investors continue to seek protection with low volatility ETFs

Even though the fastest-growing segments of the market rebounded and risk aversion sentiment began to emerge in July, investors are still investing assets in low-volatility funds, looking for protection against what might await them.

The Invesco S&P 500 Low Volatility ETF (SPLV) has received more new money in the past four weeks than any other fund in Invesco’s ETF lineup. SPLV has $11.5 billion in assets under management and is a preferred offering by investors looking for low-volatility stocks who believe the economy is primed for a bear market.

SPLV, which has an expense ratio of 25 basis points, saw $1.2 billion in four-week inflows, according to VettaFi. Year-to-date through Aug. 11, the fund has acquired $3 billion in assets under management.

This ETF tracks an index comprised of some of the largest US-domiciled companies. Accordingly, investors should view this as a bet on mega and large cap stocks in the US market. These securities are commonly known as “Blue Chips” and are some of the most famous and profitable companies in the country, including household names such as ExxonMobil, Apple, IBM and GE.

According to VettaFi, SPLV is one of the safest companies in the equity world because the companies included in the portfolio are very unlikely to go bankrupt unless there is an apocalyptic event in the economy. On the contrary, these stocks are unlikely to grow rapidly as they are already quite large and have probably had their fastest growing days in recent years, but investors are being rewarded with large dividend payouts.

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

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