SP 500 ETFs: Comparing The Twisted Funds
byStoyan BojinovonFebruary 28, 2013ETFs Mentioned:IVVRSPSPGHSPHBsphqSPLVSPYVOOVQT
Its pretty darn hard, if not altogether impossible, to read through any sort of financial publication these days without running across some mention of the S&P 500 Index. This revered benchmark has found its way onto the radar screens of countless investors and traders since its inception in 1957. More importantly, the proliferation of ETFs has made it both easy and cost-efficient for anyone with an online brokerage account to access this globally-known equity index; in fact, there arethree funds linkeddirectly to this benchmark with over $150 billion in total assets under management and more than a handful of others that employ strategies based around the coveted index [seeVisual History Of The S&P 500].
The ETFs listed below employ a traditional strategy, in the sense that they seek to replicate the performance of the S&P 500 Index
without any clever twists, bells or whistles:
As expected, these funds command the majority of the assets in theLarge Cap Blend Equities ETFdb Category, given their straightforward approach in delivering exposure to the S&P 500.
Thanks to the ongoing evolution of the ETF industry, investors now have a handful of products at their fingertips that give them the flexibility to access the popular S&P 500 benchmark with a twist. The bubble chart below compares the trailing one-year performance and 200-day volatility among several twisted S&P 500 ETFs versus the well-know SPY, revealing some noteworthy differences between them:
This ETN utilizes a dynamic strategy to allocate exposure across large cap U.S. stocks, volatility futures and cash, depending on the current market environment.
This ETN invests equal dollar amounts in long positions across S&P 500 and gold futures contracts.
PowerShares S&P 500 High Beta Portfolio (SPHB,
This ETF selects and holds 100 stocks from the S&P 500 Index that are deemed to have the highest sensitivity to market movements over the trailing 12-month period.
PowerShares Value Line Timeless Select Portfolio (SPHQ,
This fund consists of S&P 500 companies that are identified as reflecting long-term growth and stability for earnings and dividends.
PowerShares S&P 500 Low Volatility Portoflio (SPLV,
This ETF selects and holds 100 stocks from the S&P 500 Index that are deemed to have the lowest realized volatility over the trailing 12-month period.
This fund is an alternative to market cap-weighted products, like SPY, IVV, and VOO; RSP features an equal allocation to each component of the S&P 500 Index.
Of course, theres no universally right choice from the above ETFs. Keep in mind that the bubble chart is based on trailing returns, and as such, its bound to change in different market environments. For some conservative investors, a low-volatility ETF makes sense; for others, taking on more risk during bull markets might be the way to go.
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