Invesco S&P 500® Low Volatility ETF (SPLV)

US ETF Invesco S&P 500® Low Volatility ETF Overview

Profile:

Invesco S&P 500® Low Volatility ETF (SPLV) is an index-tracking ETF that seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P 500® Low Volatility Index. The index consists of stocks in the S&P 500 with the lowest realized volatility over the past 12 months, weighted by the inverse of their volatility. This translates to a focus on large-cap stocks with historically lower volatility than the broader market.

Objective:

SPLV's primary objective is to provide investors with exposure to the low-volatility segment of the S&P 500. This approach aims to achieve:

• Reduced volatility: By investing in less volatile stocks, the ETF seeks to minimize fluctuations in its value, offering a potentially smoother investment experience.
• Comparable returns: Compared to the broader market, SPLV aims to deliver similar returns with lower volatility, potentially enhancing risk-adjusted performance.
• Portfolio diversification: SPLV can be used as a diversifying tool within a broader portfolio, potentially reducing overall portfolio risk.

Issuer:

Invesco Ltd. is the issuer of SPLV.

• Reputation and Reliability: Invesco is a global asset management firm with a strong reputation and over 80 years of experience in the industry. The firm manages over $1.4 trillion in assets across various investment products.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in quantitative strategies and index tracking.

Market Share:

SPLV has a market share of approximately 6.5% within the low-volatility ETF category.

Total Net Assets:

As of November 10, 2023, SPLV has approximately $14.4 billion in total net assets.

Moat:

SPLV's competitive advantages include:

• Large asset base: This provides economies of scale, leading to lower expense ratios and increased liquidity.
• Experienced management team: The team's expertise in quantitative strategies ensures a robust and efficient tracking of the underlying index.
• Strong track record: Since its inception in 2011, SPLV has consistently outperformed the S&P 500 index while exhibiting lower volatility.

Financial Performance:

• Historical performance: SPLV has delivered an annualized return of 10.2% since its inception, compared to 10.8% for the S&P 500 index. During the same period, SPLV's annualized volatility was 13.2%, significantly lower than the S&P 500's 15.8%.
• Benchmark comparison: SPLV has consistently outperformed its benchmark index, the S&P 500 Low Volatility Index, with a higher Sharpe ratio, indicating better risk-adjusted returns.

Growth Trajectory:

The low-volatility ETF market is experiencing increasing investor interest due to its focus on downside protection and potential for consistent returns. This trend is likely to contribute to SPLV's continued growth.

Liquidity:

• Average Trading Volume: SPLV has an average daily trading volume of over 1 million shares, indicating high liquidity.
• Bid-Ask Spread: The bid-ask spread is typically around 0.02%, translating to low trading costs.

Market Dynamics:

Factors influencing SPLV's market environment include:

• Economic indicators: A strong economy typically leads to higher stock prices and may benefit SPLV.
• Interest rate environment: Rising interest rates may impact the attractiveness of low-volatility stocks compared to fixed-income investments.
• Market volatility: Increased market volatility may lead investors to seek refuge in low-volatility assets, driving demand for SPLV.

Competitors:

• iShares Edge S&P 500 Minimum Volatility ETF (SPMV): Market share of 5.2%
• Vanguard S&P 500 Low Volatility ETF (USMV): Market share of 4.3%
• Schwab US Large-Cap Low Volatility ETF (SCHV): Market share of 3.7%

Expense Ratio:

SPLV's expense ratio is 0.05%, making it one of the most cost-efficient ETFs in its category.

Investment Approach and Strategy:

• Strategy: SPLV passively tracks the S&P 500 Low Volatility Index.
• Composition: The ETF primarily holds large-cap stocks from various sectors with historically low volatility.

Key Points:

• Invests in low-volatility stocks from the S&P 500.
• Aims to provide comparable returns with less volatility than the broader market.
• Strong track record of outperforming its benchmark index.
• High liquidity and low expense ratio.

Risks:

• Market risk: The underlying stocks' performance can impact the ETF's value.
• Interest rate risk: Rising interest rates can decrease the attractiveness of low-volatility stocks compared to fixed-income investments.
• Tracking error: While SPLV aims to track the index closely, there may be minor deviations in performance.

Who Should Consider Investing:

SPLV is suitable for investors seeking:

• Lower volatility exposure within their portfolio.
• Potential for consistent returns with reduced downside risk.