A magnetoresistive element is provided as a spin valve having a synthetic free layer. More specifically, the synthetic free layer includes a low perpendicular anisotropy layer that is separated from a high perpendicular anisotropy layer by a spacer. Thus, the high anisotropy material introduces an out-of-plane component by exchange coupling. The high perpendicular anisotropy material also has low spin polarization. Further, the low anisotropy material positioned closer to the pinned layer has a high spin polarization. As a result, the magnetization of the low anisotropy material is re-oriented from an in-plane direction to an out-of-plane direction. Accordingly, the overall free layer perpendicular anisotropy can be made small as a result of the low anisotropy material and the high anisotropy material. Adjusting the thickness of these layers, as well as the spacer therebetween, can further lower the anisotropy and thus further increase the sensitivity.

 
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