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This Low Volatility Small Cap Fund Doubled Its Assets In The Past Year

In our ETF/Index options recap this morning, we spoke about some nibbling that we observed in near term March 137 puts in the largest Small-Cap Equity ETF in the U.S. listed universe, IWM (iShares Russell 2000, Expense Ratio 0.20%, $37.2 billion in AUM).

After recently trading at all-time highs, but since regressing in the past six trading sessions or so, we see that IWM has seen some profit taking year-to-date with over $2.3 billion leaving the fund via redemption flows.

These March puts in IWM expire in the very near term next Friday (3/17/17) and are now in-the-money given the recent fall in IWM from a $140 handle to where it is trading currently below $137. While IWM and another fund from iShares, IJR (iShares Core S&P Small-Cap, Expense Ratio 0.07%, $29.7 billion in AUM) are the behemoths in the Small-Cap Blend Equity space at number one and two in terms of asset size, we have noticed nice growth in a once small “Low Volatility” product offered in the category as well.

We have profiled XSLV (PowerShares S&P SmallCap Low Volatility Portfolio, Expense Ratio 0.28%, $932 million in AUM) in this piece before, but prior to the fund’s doubling in size over the past year with trailing one-year inflows of about $470 million. XSLV debuted back in February of 2013, and we imagine that the five-star Morningstar ranking certainly does not hurt asset raising assets from the perspective of the issuer, PowerShares.

Given the fact that Small-Cap stocks have been among the better performers in a post-Trump election environment, but there has recently been some position trimming and profit taking into this strength, a “Low Volatility” approach such as XSLV may receive even more attention here as folks seem to be making model changes in portfolios and perhaps taking some risk off of the table via liquidating IWM and/or purchasing downside puts in the case of additional drawdown there.

XSLV tracks the “S&P SmallCap 600 Low Volatility Index” and like several other “Low Volatility” approaches that came to market in 2012- 2013 in the “Large Cap” Equity space, appears on track for similar success in terms of its asset gathering progress. Top holdings in XSLV appear as follows: 1) GTY (1.18%), 2) PRA (1.17%), 3) NFBK (1.11%), 4) ESE (1.10%), and 5) JJSF (1.08%).


The PowerShares S&P SmallCap Low Volatility Portfolio ETF (NYSE:XSLV) was trading at $42.48 per share on Wednesday morning, down $0.23 (-0.54%). Year-to-date, XSLV has declined -2.16%, versus a +6.20% rise in the benchmark S&P 500 index during the same period.

XSLV currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #6 of 16 ETFs in the Small Cap Value ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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