Following the popularity of the Sector Dividend Dogs ETF (SDOG - ETF report), which has recently crossed the $1 billion mark in assets under management, the issuer ALPS has recently launched two funds – ALPS Sector Leaders ETF (SLDR) and ALPS Sector Low Volatility ETF (SLOW) – to expand its product portfolio.
Below we have highlighted some of the details of SLOW fund.
SLOW in Focus
The newly launched ETF seeks to provide low volatility and diversification by tracking the performance of S-Network Sector Leaders Index before fees and expenses. Five lowest volatility securities from each of the 9 GICS sectors are selected to form the fund. The holdings of the fund have S&P 500 (SPY) as their origin (read:Â Invest in America with These 4 ETFs).
The equally weighting strategy ensures stock and sector diversification while avoiding sector biases. Large caps dominate the fund with 91% allocation while the rest are devoted to mid caps. Presently, the fund holds a basket of 46 stocks with Chubb Corp (CB) Â (2.71%), Fiserv Inc.(FISV) (2.27%) and General Mills Inc. (GIS) (2.26%) being the top three holdings
Utilities, Materials, Info Tech/Telecom, Industrials, Healthcare and Financials are some of the sectors comprising the fund, each having 11.11% allocation. SLOW charges 40 basis points as fees (read:Â ETF Strategies for 2H).
How Does it Fit in a Portfolio?
The fund could be a good choice for investors seeking a diversified exposure to the U.S. large-cap stocks. Currently, the U.S. markets are experiencing volatility in the wake of the Greek crisis and concerns over rate hike at home.
In these volatile times, big and stable companies are usually safer to focus on. Unlike small and mid-cap companies, large caps are less vulnerable to market volatility (read:Â A New Equity ETF from Direxion to Weather Market Volatility).
This equal weighted fund has almost zero concentration risk as the components are allocated almost equally both on an individual stock and sector basis.
