ETF Analyst of Zacks Investment Research Sweta Killa highlights: With such a rough market, it might be best to look at these low risk ETFs

CHICAGO, April 11, 2014 /PRNewswire/ -- Securities in this article include: PowerShares S&P 500 Low Volatility Portfolio (AMEX:SPLV-Free Report), iShares MSCI All Country World Minimum Volatility ETF (AMEX:ACWV-Free Report) and PowerShares S&P 500 High Dividend Portfolio (AMEX:SPHD-Free Report).

3 Low Risk ETFs for Market Turmoil written by Sweta Killa of Zacks Investment Research:

The past few days have been choppy for the global financial market. Investors are dumping high growth and high beta stocks across the globe thanks to valuation concerns, profit-taking activity and some sluggish global economic indicators (read: The Momentum Stock Crash Puts These ETFs in Focus).

Hefty valuations are compelling investors to move from highflying securities, which have shown incredible performance last year, into larger, more-mature companies that pay dividends and act as a hedge against economic uncertainty. Concerns over rising interest rates sooner than expected, slowdown in China and renewed tensions in Ukraine continued to weigh on global growth and the stock market despite the gradually improving U.S. economy.

Further, gloomy expectations for Q1 earnings raised concerns on the stock market rally in the near term. As per the Zacks Earnings Trends, earnings as a whole for the S&P 500 are expected to be down 2.6% from the year-ago quarter on 1.0% higher revenues and modestly lower margins.

Earnings estimates have fallen sharply over the past three months from 2.1% growth projected in January. The weakness is broad-based with 10 of the 16 Zacks sectors expected to show earnings decline. Among the major sectors, finance, technology, energy, medical and basic materials will likely be the culprits (read: 3 ETFs Tumble Most on Biotech Sell-off).

Given sluggish macro fundamentals and apprehension of a weak earnings season, markets are expected to remain volatile in the coming days and investors should consider low risk products in order to protect themselves from huge losses.

Below, we have highlighted three ETFs that investors could consider in their portfolios if the stock market continues to experience volatility. These funds appear to be safe in the current market turbulence, and tend to reduce risk while generating decent returns:

PowerShares S&P 500 Low Volatility Portfolio (AMEX:SPLV-Free Report)

This ETF provides exposure to 100 U.S. stocks with the lowest realized volatility over the past 12 months by tracking the S&P 500 Low Volatility Index. The fund is widely spread across number of securities as none of these holds more than 1.24% of assets.

However, the product is tilted toward utilities at nearly 25% share while consumer staples, financials, industrials and healthcare round off to the top five (read: 3 Utility ETFs Surviving the Market Turmoil). SPLV is the largest and the most popular ETF in the low volatility space with AUM of $3.8 billion and average daily volume of around 940,000 shares. The fund charges 25 bps in annual fees and was up about 1% in the past 10 days.

iShares MSCI All Country World Minimum Volatility ETF (AMEX:ACWV-Free Report)

This fund tracks the MSCI All Country World Minimum Volatility Index. Though the ETF provides exposure to low volatility stocks across the globe, U.S. accounts for more than half of the asset base. Apart from this, Japan is the only country with a double-digit allocation. The product has managed asset base of $1.1 billion while trades in light volume of less than 50,000 shares a day. Expense ratio came in at 0.20%.

Holding 598 stocks, the fund is widely spread out across each sector and security. None of the security holds more than 1.56%, and financials, healthcare, consumer staples and consumer discretionary occupy the top four positions in terms of sector with double digit allocations. The ETF added 1.30% over the last 10 days.

PowerShares S&P 500 High Dividend Portfolio (AMEX:SPHD-Free Report)

This fund follows the S&P 500 Low Volatility High Dividend Index, which includes U.S. stocks that historically provided high dividend yields and low volatility. The ETF holds 50 stocks in its basket and each security holds less than 3.11% of assets (see: all large cap ETFs here).

Here, utilities takes the top spot from a sector look with over 26% share, followed by consumer staples (19%) and financials (15.1%). The product has amassed $145.8 million in its asset base while volume is also light. It charges 30 bps in annual fees from investors. SPHD gained over 2% in the last 10 trading sessions and has an attractive dividend yield of 3.47%.

Bottom Line

These products are clearly outpacing the broad market fund (AMEX:SPY-Free Report) by wide margins, suggesting their potential to outperform in the coming days as well. This will be especially true if investors' concerns about valuation deepen and earnings disappoint in first quarter.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

For the full article, please visit Zacks.com at:

http://www.zacks.com/stock/news/129428/3-low-risk-etfs-for-market-turmoil

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113

Follow Eric on Twitter: http://twitter.com/ericdutram

Join Zacks on Facebook: http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Eric Dutram
ETF Product Manager
Zacks Investment Research
www.zacks.com
[email protected]
312-265-9462

Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO

SOURCE Zacks Investment Research, Inc.