Invesco S&P 500 Low Volatility ETF

SPLV

Market cap $7.83B

The Invesco S&P 500 Low Volatility ETF aims to offer a smoother return profile by focusing on the least volatile S&P 500 stocks. SPLV has lagged the S&P 500 in recent years in large part due to its underweighting of the tech sector. SPLV could be suitable for investors prioritizing capital preservation and income, especially if market volatility or a tech correction emerges.

SPLV offers strong downside protection and liquidity, but its defensive sector tilt and lack of tech exposure limit growth potential versus peers like USMV. Despite a higher dividend yield, SPLV's expense ratio is less competitive, and its risk-adjusted returns lag behind USMV across all major time horizons. SPLV's heavy allocation to financials and utilities faces capped upside due to the current interest rate outlook, making the fund overly defensive in a soft landing environment.

I reiterate my Hold rating on SPLV due to stretched valuation, weak momentum, and continued underperformance versus the S&P 500. Utilities, the fund's largest sector, have struggled despite AI-driven rallies elsewhere, weighing on overall returns and outlook. SPLV's high P/E and PEG ratios, along with modest earnings growth, make the valuation unattractive for new buyers at current levels.

Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Invesco S&P 500 Low Volatility ETF (SPLV) is a passively managed exchange traded fund launched on May 5, 2011.

Key Points in This Article: The stock market is rising despite growing risks, including falling durable goods orders, uneven earnings, upcoming tech reports, global tensions, and political friction, signaling potential volatility.

Market turbulence has become a hallmark of today's investing landscape. Against the shifting sands of monetary policy and elevated macro uncertainty, investors are increasingly seeking strategies that offer stability without sacrificing long-term returns.

From President Trump's Liberation Day announcements on April 2 and the ensuing market correction, to his 90-day tariff pause announced April 9 and the market's subsequent rebound, investors have been whiplashed with volatility not seen since the onset of the pandemic.

Markets hit new record with bets on a "Goldilocks" economy, but volatility persists. AI and international ETFs like QQQ, IVES and EZU could be good bets for 2H.

SPLV offers a defensive, low-volatility approach, ideal for uncertain macro conditions and potential market pullbacks despite recent S&P 500 bullishness. The ETF's sector allocation favors utilities, financials, and consumer defensive stocks, resulting in lower valuations than the broader market. Given slowing GDP growth, a cooling labor market, and persistent macro uncertainty, SPLV should deliver superior risk-adjusted returns in the short run.

I rate SPLV a buy, driven by strong momentum in utilities, which are poised for robust demand from AI and EV-driven electricity growth. SPLV's diversified portfolio, with significant exposure to financials, consumer staples, and industrials, supports steady returns and limits downside risk. The ETF offers monthly dividends, a long payout history, and trades at a valuation discount with a low expense ratio, enhancing long-term appeal.