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One of the most noteworthy innovations in the ETF industry over the last several years has been the development of funds that deliver targeted exposure to investment “factors”, allowing for easy access to techniques that previously required extensive research and maintenance. From high momentum to low beta, there are now ETFs that slice and dice broad equity indexes in a number of different ways to deliver unique risk/return profiles.

ETFs focusing on low volatility stocks have become immediately popular with investors; eight such products have debuted over the last year, and they have already accumulated close to $1 billion in assets. The PowerShares S&P 500 Low Volatility Portfolio (SPLV), which targets the 100 components of the S&P 500 with lowest historical volatility, has gathered about $880 million since debuting last May. Other ETFs exist targeting low volatility stocks in emerging markets (EEMV), developed markets outside the U.S. (EFAV, XLVO), and small cap domestic equities (SLYV) [see also Inverse VIX ETN (XIV) Gets Hot Again].  [click to continue…]

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State Street has made a few minor changes to its ETF lineup, ditching Dow Jones indexes in favor of benchmarks maintained by Standard & Poor’s for its broad-based domestic equity funds. Historically, the SPDR ETFs offering exposure to U.S. stock markets had been a bit of a hodgepodge, with the ultra-popular SPY and MDY linked to S&P indexes (the S&P 500 and S&P MidCap 400, respectively), and Dow Jones indexes filling out the rest of the cap/style matrix. Effective last week, the following changes went into effect: [click to continue…]

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