ETF Comparison: Invesco S&P 500 Low Volatility ETF (SPLV) Versus iShares MSCI USA Min Vol Factor ETF (USMV)

SPLV vs. USMV: Total Cost of Ownership

SPLV charges 0.25%, while USMV costs 0.15%, translating to $25 versus $15 annually on a $10,000 investment. On fees alone, USMV comes out ahead.

When it comes to implicit costs, both ETFs have the same 0.015% 30-day average bid-ask spread, making this aspect a tie.

Verdict: Considering both expense ratios and trading costs, USMV is the lower-cost buy-and-hold option.

SPLV vs. USMV: Methodology and Holdings

Both SPLV and USMV aim to reduce volatility, but they go about it in diametrically different ways using competing indexes.

SPLV tracks the S&P 500® Low Volatility Index, which follows a straightforward approach. Every quarter, the fund reconstitutes and rebalances, selecting the 100 securities from the S&P 500® with the lowest realized volatility over the past 12 months. This method directly targets low-volatility stocks, leading to a static basket of defensive names.

In contrast, USMV tracks the MSCI USA Minimum Volatility Index, which uses a quantitative framework to build a portfolio that is, in the aggregate, less volatile. Instead of simply picking low-volatility stocks, USMV considers the correlations between holdings, aiming to construct a portfolio where the combination of stocks offers reduced overall volatility.

In practice, this leads to notable differences in sector composition. SPLV tends to be overweight in defensive sectors like utilities, consumer staples, and healthcare, with the first two sectors often underrepresented in market-cap-weighted indexes.

USMV, on the other hand, takes a more sector-neutral approach, maintaining sector weights that closely align with the broad market. This means USMV still has the usual overweights to tech, financials, and healthcare, making it less of a departure from the overall market.

Neither ETF is top-heavy. While USMV has more holdings than SPLV, the top 15 holdings of each account for 22.44% and 18.3% of their portfolios, respectively.

Both ETFs hold what investors traditionally consider defensive stocks, such as Berkshire Hathaway, Republic Services, Waste Management, Colgate-Palmolive, Procter & Gamble, and Walmart.

Verdict: I prefer USMV here. The more diversified approach and sector-neutral strategy ensure that any deviations from the broad market are due to individual security selection, not sector concentration bets.

SPLV vs. USMV: Risk and Return

In the short term, it’s a wash between SPLV and USMV. On a three-year trailing basis, USMV outperformed, but over the one-year and year-to-date periods, SPLV has pulled ahead.

Despite these differences, both ETFs saw sustained net outflows, indicating that risk-seeking investors remain disinterested in low-volatility strategies amid bullish market sentiment.

On the risk front, USMV has maintained a slight edge, showing lower volatility across the same periods. It also delivered a shallower max drawdown with a shorter duration, helping investors weather market swings with less turbulence.

Looking at the long-term performance from October 20, 2011, to March 4, 2025, USMV has outperformed SPLV with a compound annual growth rate (CAGR) of 12.53% compared to SPLV’s 11.06% CAGR.

USMV also experienced a smaller max drawdown of 33.10% versus SPLV’s 36.25% and offered better risk-adjusted returns, with a Sharpe ratio of 0.83 compared to SPLV’s 0.70.

Verdict: USMV wins here. It has navigated the past decade, including the March 2020 COVID crash and the 2022 bear market, with better total returns and superior risk-adjusted performance.

This article is for informational purposes only and does not in any way constitute investment advice. The author may express their own opinions, which may not represent the opinions of ETF Central or its affiliated partners. It is essential that you seek advice from a registered financial professional prior to making any investment decisions.