Is Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) a Good Investment Right Now?

The downgrade of ratings of the United States and various banks has precipitated pessimistic investor sentiments. This change is further fed by a confluence of factors such as inflation, strong retail sales numbers, and the U.S. jobs market that collectively suggest almost no possibility of a rate cut this year.

Given the market uncertainties, investors keen on maintaining their equity investments might consider buying low-volatility ETFs, such as the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD – Get Rating). SPHD’s low volatility could help navigate the turbulent market conditions while its dividend payments can serve as a steady income stream.

In July, retail sales rose 0.7% from the month prior, surpassing Wall Street’s 0.4% growth estimate, which underpins the enduring resilience of American consumers. Bureau of Labor Statistics data revealed 0.4%monthly wage gains, contributing to a 4.4% annual rise, thereby beating the forecasts.

In addition, the Fed’s restrictive monetary policy has prompted higher borrowing costs and stricter lending regulations, which have created immense pressure for many banks and non-bank businesses grappling with large corporate debts.

Moody’s recently responded to this pressure by downgrading the credit ratings of 10 U.S. banks in August while concurrently issuing warnings to major lenders of potential downgrades. Also, Fitch slashed the U.S. government’s top credit rating, citing rising debts and an “erosion of governance.”

Moreover, inflation remains above the Federal Reserve’s 2% target despite easing significantly from last year’s highs. While no further interest rate hike is foreseen this year, the likelihood of an interest rate reduction is improbable.

Despite contrasting data strands, markets are pricing in a rate hike pause. However, some experts offer contradictory predictions, speculating potential rate raises in future months.

Given the prevailing market turbulence, investing in SPHD could be an effective strategy. As a conduit to access dividend-paying large-cap enterprises with…

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