Want higher returns? take on more risk. This commonly accepted link between risk and return is a fundamental rule underlying the way we invest. PowerShares S&P 500 Low Volatility Portfolio (symbol SPLV) seeks to defy the conventional wisdom by aiming for better returns while cutting risk. The exchange-traded fund's strategy is based on academic research showing that low-volatility stocks — ones with less-severe price swings — may deliver better returns with a smoother ride than riskier stocks over the long haul.
The ETF is based on the S&P 500 Low Volatility index. Standard & Poor’s starts by sifting the S&P 500-stock index for the 100 stocks with the lowest volatility over the previous year. It then weights them by volatility, allocating more to the steadiest stocks. The resulting portfolio is heavy on defensive stocks, such as utilities and health care firms, and light on cyclical sectors, such as energy and financial firms. But Invesco PowerShares, the ETF’s sponsor, says the fund won’t always look this way and could change gears quickly if defensive sectors hit a choppy patch.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
