Advisors Use Invesco ETFs to Adjust S&P 500 Exposure

Financial advisors are reallocating S&P 500 exposure with three Invesco exchange-traded funds — SPHQ, SPLV and SPHB — to match client risk objectives as inflation readings and global tensions continue.

Recent consumer and producer price reports show inflation pressures remain. ETF flows have been strong this year: cumulative inflows through May topped $700 billion, reflecting continued investor use of ETFs to adjust market exposure.

The Invesco S&P 500 Quality ETF, SPHQ, selects 100 S&P 500 stocks ranked highest on quality measures such as profitability, balance-sheet strength and earnings stability. The fund’s rules place weight on firms that score well on those metrics.

The Invesco S&P 500 Low Volatility ETF, SPLV, holds the 100 S&P 500 companies with the lowest realized volatility over the prior 12 months. SPLV’s methodology is designed to reduce exposure to large downside swings by tilting toward less volatile names.

The Invesco S&P 500 High Beta ETF, SPHB, tracks the 100 S&P 500 names with the highest market sensitivity, measured over the past year. SPHB increases exposure to stocks that have shown larger moves with market direction.

Advisors use SPHQ to emphasize firms with stronger earnings and balance sheets, SPLV to lower portfolio volatility and SPHB to increase exposure to market-sensitive stocks. Each fund derives its holdings from the S&P 500 index but applies a specific rules-based selection to change risk and return characteristics.

Todd Rosenbluth, head of research at VettaFi, noted in an interview, “We think that higher quality companies are going to be in favor in the marketplace.”

ETF structures offer intraday liquidity, low-cost trading and straightforward implementation for model portfolios. Quality, low-volatility and high-beta indexing strategies rebalance periodically based on their selection criteria and provide alternatives to market-cap-weighted ETFs for adjusting equity allocations without exiting the S&P 500.