Low volatility funds have been quite popular this year, given bouts of volatility since the start of the year on the back of various concerns, ranging from global growth worries, slumping crude oil prices, rising dollar to concerns over the timing of rate hike.
Given the trend, Direxion has recently launched a product focusing on this niche segment. The product – Direxion Value Line Conservative Equity ETF – trades under the ticker VLLV and charges 58 basis points as fees.
VLLV in Focus
VLLV seeks to track the Value Line Conservative Equity Index. The index consists of roughly 170 U.S. stocks that have been selected using Value Line’s proprietary Safety Ranking. The ranking methodology measures the total risk of a stock and its capability to withstand an overall equity market downturn relative to the other stocks in the Value Line universe which consists of roughly 1,700 stocks.
The total risk or volatility of each stock is measured by its Price Stability Score and Financial Strength rating. The Price Stability score for a stock is based on a ranking of the standard deviation of weekly percentage changes in the price of the stock over the past five years.