Financials Gain More Prominence in Latest Low Vol Rebalance

Volatility has been generally subdued so far this year.  In the latest rebalance, the S&P 500® Low Volatility Index’s most significant sector shift was to Financials (adding 5% to bring the sector to 21% of the index).  Allocation in the remaining sectors did not deviate too far from the last rebalance. Technology’s weight, which increased significantly after May 2017’s rebalance, declined 1% but is still more than one-tenth of the index.

The methodology for the S&P 500 Low Volatility Index screens for constituents at the stock level, but using S&P 500 sectors as a proxy is often helpful in gaining a better understanding.  The trend of declining volatility persisted in all but the Telecom sector (see chart below).  Not surprisingly, Financials was among the sectors that declined the most in volatility.

The posts on this blog are opinions, not advice. Please read our disclaimers.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>