SPDR RUSSELL 1000 LOW VO. (4JZP)
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LGLV: Volatility And Convexity Not As Promising As It May Seem
The State Street SPDR US Large Cap Low Volatility Index ETF offers broad sector diversification and mitigates S&P 500 concentration risk. Despite its lower concentration risk, LGLV's low-volatility stock selection does not translate to meaningful downside protection or lower portfolio risk during market drawdowns. LGLV trades at lower multiples and offers a higher yield than SPY ETF, but has slower expected EPS growth.
LGLV: Low Beta, Value Tilt Do Not Translate Into Consistent Outperformance
State Street® SPDR® US Large Cap Low Volatility Index ETF offers exposure to a cohort of U.S. stocks with a weighted average 24-month beta of just 0.5. It makes perfect sense to consider low beta portfolios, but it is worth remembering that low volatility strategies, LGLV included, tend to meaningfully underperform IVV over the long term. Since the index change in 2016, LGLV has underperformed IVV by around 83.2%, as it was incapable of capturing a sufficient share of its upside.
LGLV: Defensive Growth Tilt And Strong Risk-Adjusted Performance
LGLV offers a compelling low volatility approach with impressive sector diversification and a surprising growth/tech tilt, enhancing risk-adjusted returns. The ETF's methodology ensures broad sector representation, limiting concentration risk and providing exposure to defensive and growth-oriented stocks. While LGLV doesn't always outperform in every market downturn, it consistently delivers superior returns versus low volatility peers, especially in growth markets.
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SPDR RUSSELL 1000 LOW VO. Profile
| XBER Exchange | US Country |
Overview
The fund is a financial instrument that focuses on investing primarily in stock securities associated with U.S. large capitalization companies that are characterized by low volatility. This strategic focus on low-volatility stocks is designed to potentially offer investors a more stable investment option within the equity market. By committing at least 80% of its total assets to securities that make up its benchmark index, the fund is dedicated to closely mirroring the performance of the index. This index specifically measures the performance of U.S. large cap companies which are deemed to have lower than average volatility, where volatility represents the degree to which the price of a stock fluctuates over time.
Products and Services
- Index-Based Investment
The fund's primary product is an investment vehicle that allocates substantially all of its assets to securities within its benchmark index. This type of investment is designed for investors looking for exposure to U.S. large capitalization stocks with a strategy to minimize volatility. It aims to replicate the performance of its index, thereby offering investors a pathway to participate in the performance of selected companies exhibiting lower volatility.
- Low Volatility Focused Portfolio
In line with its investment strategy, the fund creates a portfolio that is heavily weighted towards stocks characterized by lower volatility. This is achieved through a meticulous selection process that identifies U.S. large cap companies with a track record of lower price fluctuations. The goal is to provide a potentially less risky investment option for investors concerned about market instability and looking for steadier returns over time.
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