For investors seeking momentum, Invesco S&P SmallCap Low Volatility ETF (XSLV - Free Report) is probably on the radar now. The fund just hit a 52-week high and is up nearly 16.7% from its 52-week low price of $42.32/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed.
XSLV in Focus
The fund tracks the performance of 120 of the least volatile stocks from the S&P SmallCap 600 Index over the past 12 months. Financials (36.57%), Real Estate (21.34%) and Industrials (14.29%) are the top three sectors. The product charges 25 bps in fees (see Small Cap ETFs here).
Why the Move?
Small-cap stocks are more domestically-focused and thus not exposed to geopolitical risks and negative currency translations. Both criteria enabled the fund to cash in on an improving U.S. economy while dodging tensions stemming from trade war and a rising dollar. However, after the recent solid rally, most small-cap ETFs are trading at a rich valuation now. Such overvaluation concerns have probably pushed this low volatility small-cap fund to a 52-week high.
More Gains Ahead?
It seems that the fund will perform decently in the near term given a positive weighted alpha of 14.60.
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