This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Stock Market's Pullback Performers

The past week or so has been tough for any investor with a relatively high allocation to risky assets. I haven't rung up any JPMorgan-like losses, but my stock and commodity positions are drenched in red. The same goes for just about everyone. Global markets have pulled back a bit from what I feared were unearned (and unsustainable) highs, and are now back at a level that can be more rationally justified by underlying fundamentals.

The past two or three tumultuous weeks, however, have provided an interesting testing ground for a handful of exchange-traded funds with subtle twists on common strategies -- twists that have paid off nicely in recent trading. A couple of these ETFs are worth keeping in mind the next time stock markets start to head into a tailspin. Both delivered relatively stellar results during the recent pullback.

The first is the PowerShares S&P 500 Low Volatility Portfolio (SPLV), a product whose investment objective is easy to determine just from the name. SPLV holds the low-volatility stocks from the S&P 500, meaning a heavier allocation towards sectors such as consumer staples and utilities, and almost no weighting afforded to financials. Steering clear of volatile stocks has obvious appeal in a downturn since it presents a way to minimize losses. But SPLV has actually posted a small gain over the past five sessions, while the ultra-popular SPY is down more than 2% over that period. When prices are falling, preserving capital is the name of the game, and SPLV has done exactly that quite nicely.

Another interesting product is the U.S. Market Neutral Anti-Beta Fund (BTAL), which consists of long positions in low-beta stocks and short positions in high-beta stocks. The net result is a market neutral portfolio that generally thrives in chaotic environments, especially when stocks string together a multi-session losing streak. The rationale is straightforward: When markets are moving generally lower, high-beta stocks see bigger losses than their low-beta counterparts (BTAL has long and short positions in each sector, so it isn't simply a "long utilities, short financials" strategy).

The proof that BTAL works? It's up close to 7% in the last week -- a massive gain considering that the underlying portfolio has net zero exposure to U.S. equity markets. Unlike SPLV, BTAL hasn't really captivated investors. The fund has only about $6 million in assets, and very small daily trading volumes. But it's been tremendously effective as a tool for protecting against assets; those few investors who own BTAL are no doubt pleased with its recent performance.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Real Money
Try it NOW

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs