Friday, January 13, 2017

Low Volatility VS High Beta

A favorite of mine is comparing two ETF's - SPHB & SPLV. They are the S&P High Beta, and S&P Low Volatility ETF's that track stocks with characteristics explicitly as the names state.

There is some research that states a low volatile approach can outperform the index over periods of time.  That might be true.  But what is certainly true is high risk names are crushing it right now. The performance of SPHB is outstanding this last year as it soared 45.03%. That's compared to SPLV's 14.17% return.  For those keeping track the S&P 500 is up 17.11%

This out-performance isn't isolated to the last year. The last two months, as many might guess, SPHB has outperformed SPLV with a solid 9.36% gain versus a 4.06% gain for SPLV. 

For low volatility holders these gains are well received. It does however highlight how money can be left on the table depending on your strategy. 

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