If there’s one thing investors love, it’s consistency and reliability. Two attributes that deftly describe the trend of exchange-traded funds that track low volatility stocks.
This unique category of the ETF universe has rapidly expanded in recent years through a combination of persistent fund flows and sector momentum. The factors that ultimately shape low volatility indexes have proven to offer attractive characteristics for conservative investors that want equity exposure without the downside risk of a typical broad-based benchmark. Read more
Ask a room full of experts what the most important part of a successful investment strategy is and you will likely get a range of candid responses. Most would gravitate towards answers like security selection, position size, time, or cost as their primary recommendations.
Those characteristics are certainly important and should not be overlooked. However, the data behind ETF asset flows and fund returns continues to signify a tremendous deficiency in net performance for individual investors. Much of this gap can be attributed to behavioral choices – i.e. buying high or selling low.
The mid-point of 2016 is an excellent occasion to review the exchange-traded fund (ETF) landscape. The native transparency of ETFs allows us to visualize where investors are placing their hopes and where fund companies believe the next important trends will emerge.
Often times we see these big picture themes continue to develop for months and years as gathering momentum takes hold. Furthermore, global market forces can have a significant impact on portfolio positioning and investor sentiment to further embellish winners or burden out-of-favor sectors.
This last week, we took an important step for client portfolios by eliminating a low volatility ETF that we have held for over two years now. It was actually one of my favorite positions to own. Not for the fact that it performed above our expectations, but because it allowed us the freedom to stay invested through all the mini-crises that arose during this period. Read more
As we near the mid-point of 2016, I examine some of the top ETFs for YTD fund flows. Many of these names are obvious defensive plays and may signal some short-term exhaustion in price. Observations of risk and reward are noted throughout. Charts include: large cap stocks, international stocks, low volatility stocks, bonds, gold, and more. Recorded on June 22, 2016.