Introduction
The Legg Mason Low Volatility High Dividend ETF (LVHD) was one of the many smart beta multi-factor ETFs launched in 2015 and 2016. Most of these ETFs failed to convince both advisors and investors in their merits largely because of their complex and opaque investment selection.
I typically do not recommend ETFs holding under $500 million in AUM. However, I think that LVHD has a strong offering and has the potential to bring long-term benefits to its owners.
In its first year, LVHD outperformed SPY by 5% - 14.91% vs. 9.97%. The spread between the two was even higher in October - 11.10% v. 4.91%
At the same time, LVHD beat its main rivals, the iShares Edge MSCI Minimum Volatility USA ETF (USMV) and the PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) by more than 7% - 14.91% v. 8.38% and 7.88% respectively.
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