Within S&P Capital IQ's 811 equity ETF ranking universe, there are 70 products that launched since the beginning of 2015. Since our approach combines holdings-level analysis with ETF level metrics, we can begin ranking an ETF relatively early in its life and are not reliant on a three-year track record.
We think a review of the holdings from a risk/reward perspective, using S&P Capital IQ STARS and Quality Rankings, as well as the ETF's expense ratio and bid/ask spread, are more meaningful than how an ETF performed during the middle of strong bull market.
PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio (XRLV) launched in April 2015. This ETF is a follow-on to the popular PowerShares S&P 500 Low Volatility ETF (SPLV), which has $4.6 billion in assets under management.
However, rather than simply taking the 100 least volatile stocks in the S&P 500 index, the S&P index behind XRLV first screens out those companies that have generated the lowest returns when interest rates rise.
XRLV has less exposure to utilities (0% vs. 4.5% for SPLV) and consumer staples (16% vs. 22%) and more exposure to industrials (20% vs. 15%) and health care (15% vs. 10%). Both ETFs are rebalanced quarterly.
Elkhorn S&P 500 Capital Expenditures Portfolio (CAPX) also has generated low trading activity since its May 2015 launch. However, the ETF ranks favorably to S&P Capital IQ. Unlike another strong S&P 500 based factor ETF -- ProShares S&P 500 Dividend Aristocrats (NOBL) that has high consumer staples exposure -- CAPX looks at companies that have made efficient use of the capital spending by generating relatively strong sales growth.
The two largest sectors for the ETF were financials (24%) and information technology (23%), with semiconductors such as Nvidia (NVDA) and regional banks such as Peoples United Financial (PBCT) well represented. Relative to the broader S&P 500 index, exposure to consumer staples (5%) was light and there were no telecom services holdings. The ETF has a 0.29% expense ratio and trades with a $0.03 bid/ask spread.