Market Overview

Some ETF Sequels Are Worth Embracing

Some ETF Sequels Are Worth Embracing

In Hollywood, for every “Godfather II” or “Avengers: Infinity War,” there are a slew of sequels that fail to live up to the promise of the first movie or franchise installment.

The world of exchange traded funds has its fair share of dud sequels, but some notable ones as well.

What Happened

The Invesco S&P 500 ex-Rate Sensitive Low Volatility ETF (NYSE: XRLV) can be considered a sequel to the popular PowerShares S&P 500 Low Volatility (NYSE: SPLV). XRLV is almost three and a half years old while the $7.35 billion SPLV, one of the largest low volatility ETFs, is more than seven years old.

While SPLV holds the 100 S&P 500 components with the lowest trailing 12-month volatility, XRLV's 100 holdings feature a combination of low volatility and reduced sensitivity to rising interest rates. The Federal Reserve has boosted borrowing costs seven times since XRLV came to market.

“To us, this highlights the appeal of the ETF as XRLV provides exposure to large-cap stocks with positive correlation to rising interest rates and with low volatility,” said CFRA Research Director of ETF & Mutual Fund Research Todd Rosenbluth in a note out Monday. “On a three-year average annualized basis, XRLV's 15.4% return was well ahead of SPLV's 12.7%. However, the beta relative to the S&P 500 index of 0.89 was higher than SPLV's 0.67.”

Why It's Important

Worthwhile ETF sequels extend to international stocks as well. For example, the O’Shares FTSE Europe Quality Dividend ETF (NYSE: OEUR) is the European answer to the well-known O'Shares FTSE US Quality Dividend ETF (NYSE: OUSA). Those ETFs debuted a month apart from each other just over three years ago.

“OEUR has approximately $40 million in assets and follows a similar smart-beta approach as OUSA. These index-based ETFs utilize three factors: high quality, high dividend yield and low volatility,” said Rosenbluth.

Three countries – the U.K., Switzerland and France – combine for nearly two-thirds of OEUR's geographic exposure.

What's Next

OEUR is lagging OUSA this year, though the opposite was true in 2017. As CFRA notes, OEUR's dividend yield of 3.70 percent is about 40 percent higher than the yield on its domestic counterpart.

CFRA has Overweight ratings on OUSA and XRLV.

Related Links:

A Winning Dividend Strategy

A Fast Start For This New ETF


Related Articles (XRLV + OEUR)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas Broad U.S. Equity ETFs Dividends Top Stories Analyst Ratings Trading Ideas ETFs Best of Benzinga

Latest Ratings

MNSTTruist SecuritiesMaintains105.0
MNSTDeutsche BankMaintains102.0
AXUAlliance Global PartnersInitiates Coverage On4.0
SNYDeutsche BankInitiates Coverage On
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at