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Low Volatility ETFs from State Street Global

Low Volatility ETFs from State Street Global
February 21, 2013

State Street Global Advisors (SSgA) unveiled two exchange-traded funds (ETFs) aimed at reducing stock market gyrations.

The SPDR Russell 2000 Low Volatility ETF (NYSEARCA:SMLV) and the SPDR Russell 1000 Low Volatility ETF (NYSEARCA:LGLV) made their debut on Feb.21.

“Our new low volatility SPDR ETFs were developed in response to increasing demand from investors looking to improve the risk adjusted returns of their portfolio, increase their equity allocation while maintaining downside protection, or tactically take a more defensive approach to the US large cap or small cap markets,” said James Ross, senior managing director and global head of SPDR Exchange Traded Funds at SSgA.

SMLV is linked to the performance of the Russell 2000 Low Volatility Index which is composed of low volatility small cap stocks within the index. Stocks are screened based on volatility from the previous 252 trading days. The index is then optimized to provide low volatility small cap exposure while managing turnover and neutralizing other factors, such as beta and momentum. 

The fund’s underlying index is reconstituted monthly to maintain its focus on low volatility stocks, and as of January 31, 2013, included approximately 164 securities. The fund charges annual expenses of 0.25%.

LGLV tracks low volatile large cap stocks inside the Russell 1000, using the same screening strategy as SMLV. The fund’s underlying index is reconstituted monthly, and as of January 31, 2013, included approximately 95 securities. LGLV charges annual expenses of 0.20%.

Ross added, “By helping investors and advisors better manage risk in their portfolios, the SPDR Russell 2000 Low Volatility ETF and SPDR Russell 1000 Low Volatility ETF are key additions to our growing family of SPDR ETFs.”

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