Halfhearted optimism could be the phrase that best describes how investors are feeling, as we’ve seen a nice rally during the past two weeks of trading. With few, if any, of the major headwinds having been resolved yet, we also can expect the market to be susceptible to significant volatility in 2012. Fortunately for cautious investors, PowerShares recently launched two new exchange-traded funds (ETFs) that focus on low-volatility stocks: the PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSE: EELV) and the PowerShares S&P International Developed Low Volatility Portfolio (NYSE: IDLV).
The rationale behind the launch of these new funds is simple. There are plenty of opportunities for investors in the developed and emerging markets, but rocky conditions can wreak havoc on an otherwise diversified portfolio that features good investments.
For EELV, its top holdings include: Global X FTSE Colombia 20 ETF, 4.10%; Cathay No 1. REIT, 1.34%; Maxis Bhd, 1.18%; Public Bank Bhd, 1.16%; Nestle (Malaysia) Bhd, 0.97%; Taiwan Secom Co., 0.93%; Redefine Properties, 0.83%; Chunghwa Telecom Co. 0.80%; UMW Holdings Bhd, 0.76%; and Malyan Banking Bhd., 0.75%.
As for IDLV, its top holdings, including consumer staples and utilities companies that performed remarkably well in 2011, are: TrustPower Ltd., 0.96%; Great Eastern Holdings, 0.83%; Singapore Press Holdings, 0.81%; Nissin Foods Holdings Co., 0.78%; Bell Aliant Inc., 0.77%; Goodman Property Trust, 0.74%; Port of Tauranga Ltd., 0.71%; Nankai Electric Railway Co., 0.71%; SMRT Corp., 0.70%; and Kiwi Income Property Trust, 0.68%.
As we continue into the new year, the first half likely will be the most volatile as Europe forges debt-relief plans, as trading volume stays fairly low and as reduced growth expectations are factored into the share prices of European and U.S. stocks. While the biggest market-moving events are difficult to predict, low volatility ETFs such as EELV and IDLV could offer ways to stabilize your portfolio’s performance in 2012.
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