Major equity indexes have been grinding higher all week on hopes that policymakers in Washington D.C. will agree to steer in the same direction before we drive off the “fiscal cliff.” The Federal Reserve put pressure on gridlocked politicians during yesterday’s FOMC statement during which Chairman Bernanke noted that the Fed doesn’t have the necessary tools to avert the potentially detrimental effects should we see automatic tax hikes and spending cuts. On the data front, the domestic recovery continues to show signs of life; this week investors have digested better-than-expected jobless claims data along with a positive retail sales reading. Amid the mixed landscape, State Street filled the development pipeline with low volatility proposals while Fidelity filed for its first actively-managed ETF [see 101 High Yielding ETFs For Every Dividend Investor].
Industry giant State Street Global Advisors is planning to roll out two low-volatility funds based on Russell benchmarks that were used in ETFs from Russell, which closed earlier this year [see Low Volatility ETFdb Portfolio]:
- SPDR Russell 1000 Low Volatility ETF: The underlying benchmark is part of the Russell-Axioma Factor Index series, which applies a screening and ranking methodology to select a basket of low volatility securities from the broad Russell 1000 Index.
- SPDR Russell 2000 Low Volatility ETF: Similar to the filing profiled above, this ETF will employ a screening and ranking methodology resulting in a portfolio comprised of low volatility stocks from the popular Russell 2000 Index. Both of the proposed low-volatility ETFs will face stiff competition from other industry giants in the space, most notably PowerShare’s wildly successful S&P 500 Low Volatility Portfolio (SPLV) with over $3 billion in assets under management.
Fidelity has filed for exemptive relief as the firm is looking to add the first active ETF to its product roster [Download 101 ETF Lessons Every Financial Advisor Should Learn]:
- Fidelity Corporate Bond ETF: In the SEC filing, the firm outlines plans for an actively-managed fund that will seek to generate a high level of current income; the underlying portfolio will consist of investment grade corporate bonds from both domestic and foreign issuers.
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