Invesco S&P 500 Low Volatility ETF’s SPLV cut-and-dried approach is commendably transparent, but it invites sector biases that threaten the fund’s low-volatility objective. It receives a Morningstar Medalist Rating of Neutral. 

Aspects of the S&P 500 Low Volatility Index, the benchmark that this fund replicates, are sound. It takes the 100 least-volatile S&P 500 constituents, measured by trailing 12-month standard deviation, and weights them based on volatility. Recent volatility tends to persist in the short term, so this fund’s 12-month lookback period makes sense. Its quarterly rebalancing schedule frequently reshuffles the deck, keeping the fund nimble and responsive to market currents. 

This fund has flaws. It overloads traditionally defensive sectors, like utilities and consumer staples, at the expense of tech, communications, and energy firms. These incidental sector bets can pile up. At the end of April 2023, the fund’s 23% utilities stake more than quadrupled the Russell 1000 Value Index, its category benchmark, while its technology, communications, energy, and financials allocations all fell between 5 and 10 percentage points short. Tilts of this magnitude can compromise the fund’s low-risk aspirations. 

The early-2020 pandemic-fueled market selloff laid these risks bare. With more than half of its portfolio packed into real estate and utilities, this fund was caught flat-footed when tech, healthcare, and communications stocks held up best. The fund fell 1.87 percentage points further than its parent index from Feb. 19, 2020, through March 23, 2020, and trailed far behind in the subsequent recovery. 

Otherwise, the fund has done what it aims to: fare relatively well in drawdowns but lag during rallies. From its May 2011 inception through April 2023, it captured only 64% of the S&P 500’s downside and 69% of its upside. That has translated into attractive lifetime risk-adjusted performance, but 2020 exposed the fund’s latent risks and left a stain on its track record that is hard to ignore.

Analyst Rating

Lopsided sector bets warrant caution.

Analyst

Ryan Jackson

Coca-Cola

Berkshire Hathaway Inc. - Ordinary Shares - Class B

Republic Services

Waste Management

McDonald's

Walmart

PepsiCo

Colgate-Palmolive

Kroger

Kimberly-Clark

This fund offers direct exposure to the S&P 500’s steadiest constituents, but its lack of constraints exposes it to avoidable risks. It warrants an Average Process Pillar rating.

Each quarter, the S&P 500 Low Volatility Index ranks each constituent of the S&P 500 by return volatility over the trailing 12 months and adds the least-volatile 100 to the portfolio. It weights stocks based on the inverse of this volatility measure, so the least-volatile stocks earn the heaviest weight in the portfolio. The index rebalances each February, May, August, and November. 

Quarterly rebalancing helps the fund adapt to market conditions and unload segments of the market that face increasing risk. Consistent turnover requires transaction costs that take a bite out of total returns, though. The fund’s 68% average annual turnover over the past five years comfortably exceeded the category median’s 41% over the same span. 

Unlike some other low-volatility offerings, this index does not use any constraints or consider how its constituents’ performance relates to others. This makes for a transparent approach but exposes the fund to sources of risk that more well-rounded peers effectively mitigate. Sector tilts are the most pertinent concern, but the fund’s value-growth stance can wobble as well.

Average

Process

The team boasts a wealth of experience and strong supporting infrastructure, including analysts, traders, and technology platforms. It earns an Above Average People rating.

Hubbard heads up the index portfolio management team. He has been with Invesco since 2005 and a portfolio manager since 2007. Jeanette leads the equity index team under Hubbard and has been a portfolio manager at Invesco since 2008. Seisser and Doshi joined the team in 2013 and 2018, respectively. These leaders oversee a broader team of experienced portfolio managers who assist with the portfolio’s day-to-day operations.

The team draws on a solid pool of resources from Invesco. Much of the workflow is automated, courtesy of the firm’s proprietary portfolio-management dashboard. A team of analysts assists with corporate actions and advise on necessary steps to anticipate upcoming index changes. Trade execution is handed to Invesco’s global trading desk, allowing the managers to focus on mitigating tracking error and tax efficiency. The team is subject to independent risk oversight.

Above Average

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Parent

Invesco S&P 500 Low Volatility ETF

SPLV tracks a volatility-weighted index of the 100 least-volatile stocks in the S&P 500.

ATAC US Rotation ETF

Utilities Select Sector SPDR Fund

Kurt Altrichter, chief investment officer at Ivory Hill, thinks relying solely on economic signals for investment decisions isn't enough. Finding the best ETFs takes more effort.

Advisor Picks 3 ETFs To Navigate Fed And Election Wildcards

An often-cited downside of investing in defensive sectors, such as consumer staples and utilities, is that stocks in those groups often command above-average valuation due to their attractive dividend yields and below-average volatility traits. However, the Invesco S&P 500 Low Volatility ETF (SPLV) isn't richly valued.

Low Volatility Stocks Unusually Inexpensive

If you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Invesco S&P 500 Low Volatility ETF (SPLV), a passively managed exchange traded fund launched on 05/05/2011.

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

In a market led by growth stocks, some investors might be glossing over defensive fare and low volatility exchange traded funds. However, those ETFs remain relevant, because history confirms markets can turn on a dime and leadership can rapidly change.

Low Volatility ETF Proving Sturdy

iShares Edge MSCI Min Vol USA ETF

Invesco S&P 500 Low Volatility ETF focuses on the least volatile stocks, while iShares MSCI USA Min Vol Factor ETF constructs an optimized portfolio.

SPLV And USMV Have Different Views On Volatility, So Which Is Better?

With the S&P 500 at all-time highs and growth stocks leading the charge, it's understandable some investors aren't concerned about market volatility. As a result, they aren't paying much attention to low volatility stocks and ETFs.

Low Volatility Investing Still Holds Appeal

ARK Innovation ETF

Avantis U.S. Small Cap Value ETF

Vanguard S&P Mid-Cap 400 ETF

Vanguard S&P Mid-Cap 400 Value ETF

iShares Core S&P 500 ETF

iShares S&P 500 Growth ETF

iShares Micro-Cap ETF

iShares Russell 2000 ETF

iShares Russell 2000 Value ETF

iShares Russell 2000 Growth ETF

iShares Russell Mid-Cap Growth ETF

iShares Russell Midcap ETF

iShares Russell Mid-Cap Value ETF

iShares Dow Jones U.S. ETF

Invesco QQQ

SPDR Portfolio Mid Cap ETF

Invesco S&P 500 Momentum ETF

Invesco S&P 500 Minimum Variance ETF

SPDR Portfolio Small Cap ETF

SP Funds S&P 500 Sharia Industry Exclusions ETF

Direxion Daily S&P 500 Bull 2x Shares

Invesco S&P 500 Value with Momentum ETF

Invesco S&P 500 Enhanced Value ETF

The Federal Reserve kept rates steady and maintained a hawkish stance toward inflation while acknowledging an outstanding economy and progress in vanquishing inflationary pressure. Expectations for rate cuts in March were dampened by a change in statement language and Powell's comments in the press conference.

January FOMC Meeting Review: The 'Fed-Amental' Attribution Error

iShares Edge MSCI Min Vol Global ETF

Vanguard Short-Term Bond ETF

iShares Edge MSCI Min Vol Emerging Markets ETF

iShares Edge MSCI Min Vol EAFE ETF

iSh SP US PrfSt Shs

Invesco S&P 500 High Dividend Low Volatility ETF

Invesco S&P MidCap Low Volatility ETF

It's been a volatile few years for the stock market, and that has investors sniffing out low-volatility ETFs. Just understand their strengths and their limitations.

Best Low-Volatility ETFs for When the Market is a Roller Coaster

Invesco's S&P 500 Low Volatility ETF, Invesco's S&P 500 High Dividend Low Volatility ETF, and iShares MSCI USA Minimum Volatility Factor ETF are three major funds that aim to provide low volatility and stable returns. SPLV provides a mix of low volatility and solid performance with holdings in McDonald's, Berkshire Hathaway, and Procter & Gamble. USMV has the highest historical performance, lowest expense ratio, and strong holdings in Broadcom and T-Mobile, making it the most attractive option.

SPLV And The Battle Of Low Volatility ETFs

JPMorgan BetaBuilders Japan ETF

JPMorgan Equity Premium Income ETF

Janus Henderson Mortgage-Backed Securities ETF

iShares MBS ETF

Meet a Strategist is a feature where Evan Harp talks to different strategists about how their firms are responding to the current moment. This week, he sat down with Rob Williams, chief investment strategist of Sage Advisory.

Meet a Strategist: Rob Williams of Sage Advisory

SPDR MSCI USA StrategicFactors ETF

SPDR S&P Dividend ETF

Morgan Stanley strategist Wilson believes that this is just a bear market rally rather than a start of a prolonged uptrend, as quoted on CNBC.

Is This a Bear Market Rally? ETF Strategies to Win

Invesco S&P Emerging Markets Low Volatility ETF

Invesco S&P International Developed Low Volatility ETF

Invesco S&P SmallCap Low Volatility ETF

Defensive factors have seen a resurgence during the recent weakness in markets. U.S. equities struggled last month due to volatile and increasing bond yields, third-quarter earnings releases, and geopolitical conflict.

Defensive Factors See Resurgence During Recent Market Weakness

iShares MSCI Emerging Markets ex China ETF

Freedom 100 Emerging Markets ETF

iShares Core MSCI Emerging Markets ETF

Kraneshares China Internet And Covered Call Strategy Etf

KraneShares CSI China Internet ETF

SPDR S&P 500 ETF Trust

Vanguard FTSE Emerging Markets ETF

Columbia EM Core ex-China ETF

While developed U.S. and non-U.S. markets indexes were up year to date through October 20, emerging markets benchmarks were treading water. The two largest emerging markets ETFs are the Vanguard FTSE Emerging Markets (VWO) and the iShares Core MSCI Emerging Markets (IEMG).

Chart of the Week: Reducing Emerging Markets Risks

ALPS Barron's 400 ETF

iShares Core Dividend Growth ETF

iShares S&P 500 Value ETF

iShares Russell 1000 Value ETF

Simplify Interest Rate Hedge ETF

iShares MSCI USA Quality Factor ETF

Global X Interest Rate Hedge ETF

Advocate Rising Rate Hedge ETF

Vanguard Dividend Appreciation ETF

Vanguard Value ETF

Given the current market environment, we have highlighted some investing strategies for the fourth quarter that could prove to be extremely beneficial for investors.

5 Winning ETF Strategies for Q4

SPLV, a well-established low-volatility ETF, has underperformed most peers since its launch. This article evaluates its total returns and fundamentals against three alternatives: USMV, FDLO, and LGLV. My analysis reveals SPLV is not well-diversified at either the sector or industry levels. Since every recession is different, investors banking on a highly-concentrated portfolio for protection may be disappointed. I'll offer two other reasons why SPLV doesn't belong in your portfolio over the long run, but a short-term value opportunity may exist for traders.

SPLV: 3 Reasons To Avoid This Low-Volatility ETF

Simplify Managed Futures Strategy ETF

Manager Directed Portfolios - iM DBi Managed Futures Strategy ETF

Fidelity Low Volatility Factor ETF

KFA Mount Lucas Index Strategy ETF

Hartford Multifactor US Equity ETF

ProShares Short VIX Short-Term Futures ETF

ProShares VIX Short-Term Futures ETF

WisdomTree Managed Futures Strategy Fund

Bull vs. Bear is a weekly feature where the VettaFi writers' room takes opposite sides for a debate on controversial stocks, strategies, or market ideas — with plenty of discussion of ETF ideas to play either angle. For this edition of Bull vs.

Bull vs. Bear: Are Low Volatility ETFs Best for Today's Market?

Selling pressure in the equity market due to the rise in Treasury yields has hurt otherwise defensive and low-volatility sectors. SPLV remains somewhat expensive, given its low-growth allocation. With weak momentum and a downtrend in place, I outline key price levels to watch heading into year-end.

SPLV: Indebted Sectors Hurting 'Low-Volatility' Stocks

Alerian MLP ETF

SPDR Bloomberg 1-3 Month T-Bill ETF

Innovator S&P 500 Buffer ETF - October

Global X Robotics & Artificial Intelligence ETF

Amplify CWP Dividend & Option Income ETF

iShares Robotics & Artificial Intelligence Multisector ETF

MUSQ Global Music Industry ETF

Flexshares US Quality Low Volatility Index Fund

ROBO Global Robotics and Automation ETF

ALPS Sector Dividend Dogs ETF

iShares 1-3 Year Treasury Bond ETF

Neos S&P 500 High Income Etf

iShares 20+ Year Treasury Bond ETF

VictoryShares Free Cash Flow ETF

Vanguard High Dividend Yield ETF

Consumer Staples Select Sector SPDR Fund

Consumer Discretionary Select Sector SPDR Fund

SPDR S&P Oil & Gas Exploration & Production ETF

Global X S&P 500 Covered Call ETF

Hello, VettaFi Voices! Whenever I read about the economy in 2023, the one word that comes up repeatedly in various forms is “uncertain.

VettaFi Voices On: Risk Management in an Uncertain Economy

Low-volatility ETFs have the potential to outpace the broader market in bearish conditions or an uncertain environment, providing significant protection to the portfolio.

Low Volatility ETFs to Outperform: Here's Why

Innovator S&P 500 Buffer ETF - September

The Goldman Sachs Future Planet Equity ETF

iShares Global Clean Energy ETF

KPOP and Korean Entertainment ETF

KraneShares Global Carbon ETF

Global X AgTech & Food Innovation ETF

Neuberger Berman Carbon Transition Infrastructure ETF

First Trust NASDAQ Clean Edge Green Energy Index Fund

American Century U.S. Quality Growth ETF

Tema American Reshoring ETF

AllianzIM US Large Cap Buffer20 Sep ETF

Engine No 1 Transform Supply Chain ETF

Greetings, VettaFi Voices! In recent months, we've talked about a lot of different issues, from the micro to the macro, but let's go REALLY big picture this week.

VettaFi Voices On: The Biggest Threat to the Global Economy

Investors can position their portfolios more defensively to safeguard the gains achieved year to date. The economic outlook for the duration of 2023 and beyond remains uncertain.

Position Defensively With SPLV to Safeguard Gains

Low-volatility ETFs have the potential to outpace the broader market in bearish conditions or in an uncertain environment, providing significant protection to the portfolio.

Low-Volatility ETFs to Bet Amid Market Volatility

Higher rates are presenting opportunities. And as the stock rally broadens, investors get more choices of the best ETFs.

Money Manager Shares Sage Advice For Picking Best ETFs

VanEck Morningstar Wide Moat ETF

VanEck Vectors Morningstar International Moat ETF

Some market participants are now of the view that the first-half Wall Street rally has come to an end and a challenging market is waiting for us.

Is a Volatile Market Awaiting Us? ETF Strategies to Follow

SPDR SSGA US Large Cap Low Volatility Index ETF

The article compares two low-volatility equity ETFs: Invesco S&P 500 Low Volatility ETF and SPDR SSGA US Large Cap Low Volatility Index ETF.

SPLV Vs. LGLV: Another Little Known ETF Bettering Big Brother

News for Invesco S&P 500 Low Volatility ETF ETF (SPLV)