SPDR SSGA US Small Cap Low Volatility Index ETF (SMLV)
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SMLV: A Low-Volatility ETF With Limited Appeal
SPDR SSGA US Small Cap Low Volatility Index ETF focuses on U.S. small-cap stocks with low volatility but doesn't outperform broader or larger-cap low volatility funds. SMLV's portfolio is heavily weighted towards value stocks, with 54% in value and only 6% in growth, leading to weaker growth prospects. The fund has a high 68.7% exposure to the financial sector, making it vulnerable during economic downturns and less diversified.
SMLV: Moderate Volatility With Heavy Allocation To Financials
The SPDR SSGA US Small Cap Low Volatility Index ETF achieves low volatility through a concentrated portfolio in financial services, outperforming the Russell 2000 with lower volatility. SMLV's low price-to-earnings multiples make it suitable for value-oriented investors, especially those bullish on financials, particularly regional banks. Despite sector concentration, SMLV's outlook is positive, as it is poised to benefit from local U.S. infrastructure investments and increased M&A activity.
SMLV: No Reason Pairing Small-Cap With Low Volatility
SMLV tracks a small-cap low-volatility index in order to provide exposure to the small-cap segment but with a low-volatility bias. This may appear like a good idea for risk-averse investors, but the limited impact the low-volatility factor has here complicates things. For a defensive position, choosing a mid-cap or large-cap fund with a low-volatility bias seems like the wiser choice.
SPDR SSGA US Small Cap Low Volatility Index ETF (SMLV) FAQ
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Has SPDR SSGA US Small Cap Low Volatility Index ETF ever had a stock split?
SPDR SSGA US Small Cap Low Volatility Index ETF Profile
| ARCA Exchange | US Country |
Overview
The company in question operates a fund primarily focused on investing in U.S. small capitalization companies that are characterized by low volatility. This investment approach involves allocating at least 80% of the fund's total assets towards securities that are part of an index specifically designed to track the performance of these low-volatility, small-cap stocks. The emphasis on low volatility is central to the fund's strategy, as volatility represents the degree to which a stock's price varies over time, and a lower volatility is often sought by investors looking for more stable returns.
Products and Services
The fund offers a singular, focused investment product characterized by its adherence to the following investment principles:
- Small Capitalization Stock Investments:
These investments target companies with smaller market capitalizations. The selection criteria go beyond simple market cap to include companies exhibiting stability in their stock prices, a feature that traditionally appeals to conservative investors or those with a lower tolerance for market swings.
- Low Volatility Focus:
By concentrating on low volatility stocks within the small-cap sector, the fund aims to mitigate risk often associated with smaller company investments. Volatility, or the extent to which the price of a security moves up or down, is a crucial factor in the investment decision-making process, particularly for those seeking steadiness in their investment returns.
- Index-Based Strategy:
The investment strategy is built around a specific index that tracks the performance of U.S. small-cap companies showing low volatility. This index-based approach provides a transparent and systematic method for selecting stocks, allowing investors to benefit from a diversified portfolio that mirrors the characteristics and performance of the targeted segment of the market.
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