In his seminal work on strategy, “The Art of War,” Sun-Tzu writes: “In the midst of chaos, there is also opportunity.” Now, while I believe this quote holds true in all aspects of life, it’s incredibly timely in the current political climate given a potential trade war, reciprocal tariffs, cuts by DOGE and all-around change.
Perhaps the situation cannot be so accurately pegged as “chaotic,” per se, but it is certainly fluctuating — and fluctuation in the stock market can present both risk and reward. Today, I’m about to show you an exchange-traded fund (ETF) that may prove to be an opportunity in the chaos.
The Invesco S&P 500 Low Volatility ETF (SPLV) is a passively managed exchange-traded fund designed for investors seeking exposure to the Large-Cap Blend segment of the U.S. equity market. Further, its low-volatility strategy works to mitigate market extremes and help investors weather the storms in the long term.
For those reasons, it may behoove one to consider strengthening the odds and lowering volatility with the Invesco S&P 500 Low Volatility ETF (SPLV). Exposure to the Large-Cap Blend segment is a key part of the opportune nature of this ETF. This segment is comprised of large-cap companies that, more often than not, have market caps over $10 billion — and such cash-abundant stocks lead to more stability, more sure-fire cash flows than mid- and small-cap companies and, most importantly, less inherent risk. In a time of chaos, or fluctuation, an ETF that offers stability and less risk certainly sounds like an opportunity siren song.
The fund has $7.68 billion in net assets and $7.58 billion in assets under management. If that doesn’t scream opportunity, then I shall forge ahead. SPLV has an expense ratio of 0.25%, which in relation to its peers, is not only reasonable but appealing, given its cash-rich portfolio.
I know many readers who have ridden out many a market storm with me, and so you know that sometimes, the chart is not the selling point — and that is occasionally the nature of the beast. Yet, there is also shared knowledge that the chart maketh not the ETF.
Though, in this case, the chart serves to drive home my point about opportunity amidst the chaos. It doesn’t take a seasoned investor to see the strength of SPLV throughout this past year — which was rife with fluctuation. Yes, at this moment, the fund has dipped slightly from its recent high, but in the opposite direction, it also spiked off a brief dip in early March.
The fund’s top 10 holdings include The Coca-Cola Company (KO), 1.32%; Marsh & McLennan Companies, Inc. (MMC), 1.30%; Berkshire Hathaway Inc. (BRK-B), 1.27%; Republic Servies, Inc. (RSG), 1.22%; Linde plc (LIN), 1.18%; The Procter & Gamble Company (PG), 1.17%; Atmos Energy Corporation (ATO), 1.16%; Evergy, Inc. (EVRG), 1.15%; Automatic Data Processing, Inc, (ADP), 1.15% and Johnson & Johnson (JNJ), 1.13%.
Ultimately, SPLV is a cash-saturated opportunity, which may be able to offer investors the opportunity amidst the chaos. Its large-cap blend exposure combined with its low-volatility strategy may help offset market volatility and fluctuation propagated by the flurry of change in the current political climate.
Investors should always do their due diligence before adding any stock, fund or ETF to their portfolio.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.
