iShares MSCI Emerging Markets Min Vol Factor ETF (BATS: EEMV)

iShares MSCI Emerging Markets Min Vol Factor ETF (BATS:EEMV), Trade Ideas

iShares MSCI Emerging Markets Min Vol Factor ETF

iShares Edge MSCI Min Vol Emerging Markets ETF

iShares MSCI Emerging Markets Minimum Volatility Index Fund

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Emerging Market ETFs

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EEMV

A Safer Way To Consider Emerging Markets

Emerging Markets

Put The Clamps On Emerging Market Volatility With This ETF

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Markets

Low Vol Emerging Markets ETF Has Perks And Drawbacks

The low volatility factor is again proving to be a hit among exchange traded funds investors this year, but investors deploying that factor often lean toward domestic equities.
As the iShares Edge MSCI Min Vol Emerging Markets ETF (CBOE: EEMV) proves, investors can reduce equity volatility in developing economies, too. The $5.46 billion EEMV follows the MSCI Emerging Markets Minimum Volatility Index and holds 337 stocks.
EEMV makes good on its reduced volatility promise. The fund&#39;s three-year standard deviation is just over 10%, or more than 400 basis points below that of the MSCI Emerging Markets Index.
<h3>Why It&#39;s Important</h3>
Over the past three years, EEMV has been 560 basis points less volatile than the MSCI Emerging Markets Index while lagging that benchmark by 260 basis points.
&ldquo;Investors concerned about volatility may want to consider minimum volatility funds, which potentially can smooth out the ups and downs of EM investing,&rdquo; <a href="https://www.blackrockblog.com/2019/10/14/investing-in-emerging-markets/">said BlackRock in a recent note</a>. &ldquo;Consider the example of the recent decline: The MSCI Emerging Market Minimum Volatility Index is down around 10% since January 2018, well outperforming the MSCI EM Index&rsquo;s 19% drop.&rdquo;
At a time of still lingering trade uncertainty with China, EEMV could be attractive because its weight to the world&#39;s second-largest economy is more than 500 basis points below that of the parent index. EEMV is also overweight South Korea, typically one of the least volatile emerging economies, compared to the MSCI Emerging Markets Index.
&ldquo;In just five years China&rsquo;s weight in the MSCI Emerging Markets Index has risen from ~20% to 33% currently and is expected to exceed ~40% at full inclusion of China A shares,&rdquo; according to BlackRock.
<h3>What&#39;s Next</h3>
EEMV has been a modest hit with investors this year, attracting over $363 million in new assets. That could be a sign that if emerging markets equities legitimately rebound, investors wanting some added protection over cap-weighted products may revisit EEMV.
At the sector level, the bulk of the fund&#39;s defensive positioning is derived from a combined 40.50% weight to the financial services and consumer staples sectors.
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Emerging markets equities and the corresponding exchange traded funds are rebounding, but as has been seen in previous eras of emerging markets bullishness, this asset class is not always known for smooth sailing.
The MSCI Emerging Markets Index has a three-year standard deviation of 14.8 percent, well above the comparable metric on the S&amp;P 500 and the MSCI EAFE Index.
<h3>What Happened</h3>
For investors looking to nibble at emerging markets stocks with lower volatility, the iShares Edge MSCI Min Vol Emerging Markets ETF (CBOE: EEMV) is a sensible option. EEMV is up almost 6 percent year-to-date compared to a gain of about 9 percent for the MSCI Emerging Markets Index.
&ldquo;For those who are skittish about the volatility of EM equities, minimum volatility investments might be a more palatable exposure to the asset class,&rdquo; said BlackRock <a href="https://www.blackrockblog.com/2019/02/06/emerging-markets-with-minimum-volatility/">in a note published Tuesday</a>. Funds such as the iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV), seek to track indices that aim to provide broad exposure to an asset class but in a manner designed to reduce risk.
<h3>Why It&#39;s Important</h3>
EEMV&#39;s three-year standard deviation of <a href="https://www.ishares.com/us/products/239641/?referrer=tickerSearch">just over 11 percent</a> is inline with those of some major developed market indexes, indicating the fund is doing its job a volatility-reducing play on developing economies.
Amid last year&#39;s emerging markets swoon, EEMV did its jobs. The low volatility fund was 680 basis points less volatile than the MSCI Emerging Markets Index while declining&nbsp;just 5.8&nbsp;percent compared to 15.3&nbsp;percent for the MSCI index.
&ldquo;True to its design, EEMV has historically provided investors with downside risk mitigation,&rdquo; according to BlackRock. &ldquo;In 2018, EEMV declined 58% less than that of broad EM as measured by the MSCI Emerging Markets Index. &ldquo;If we extend the analysis to a longer period of time, similar performance behaviors hold. Since its first full month of live performance in November of 2011, EEMV has exhibited a downside capture of only 78%, reduced volatility by over 23%, and dampened the maximum drawdown by 22%.&rdquo;
<h3>What&#39;s Next</h3>
China, Taiwan and South Korea, which are usually among the least volatile emerging markets, combine for nearly half of EEMV&#39;s geographic exposure. Evaporating trade war fears could bolster the case for emerging markets stocks this year, potentially providing some upside for EEMV along the way.
&ldquo;Recently, we have seen trade wars disrupt and pressure EM; however, we believe that much of the potential impact of these trade wars has already been priced in,&rdquo; said BlackRock. &ldquo;That said, volatility may escalate or subside from here.&rdquo;
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Asian markets are off to a rough start for the year after disappointing data from&nbsp;<a href="https://www.benzinga.com/topic/china">China</a>, but with valuations at &quot;rock-bottom levels,&quot; there&#39;s opportunity to be found internationally, according to Eastspring Investments&#39; Ken Wong.&nbsp;
<h3>Wong: Asian Pickup In Second Half Of 2019</h3>
The first half of 2019 could see a continuation of weakness in Asian markets, especially after disappointing Chinese manufacturing data for December, Wong <a href="https://www.cnbc.com/video/2019/01/01/asian-markets-are-at-rock-bottom-valuation-levels-investor.html">told CNBC</a> in a recent interview.
If Chinese economic data&nbsp;continues to cause concern&nbsp;in the coming months, the government could start taking action in the back half of 2019 to support the economy through policy easing, interest rate reductions&nbsp;and loosening of credit, he said.&nbsp;
Supportive policies could help lift the 2019 outlook for Asian stocks, especially at a time when sentiment is so low, Wong said.&nbsp;
Upcoming national elections in India could generate some &quot;positive sentiments&quot; for investors, he said: the country boasted the best-performing stock market in all of Asia, and earnings growth is expected to come in &quot;upwards of 20 percent&quot; in 2019.
&quot;All it takes is some positive sentiment, some good upwards earnings revisions,&quot; Wong&nbsp;said. &quot;That could help boost up markets and overall sentiment and valuations.&quot;
<h3>What About Brazil?</h3>
The Brazilian national currency, the real, started rebounding after the election of <a href="https://www.benzinga.com/government/18/10/12583623/bolsonaro-wins-brazilian-presidential-election">Jair Bolsonaro</a> as president, Damien Loh, chief investment officer at Ensemble Capital, <a href="https://www.bloomberg.com/news/videos/2019-01-02/emerging-markets-slated-for-a-rebound-says-ensemble-capital-s-loh-video">said on &quot;Bloomberg Markets: Asia.&quot;</a> The priority for the new head of state is to show global markets the &quot;honeymoon is over,&quot; but he will likely face difficulty in delivering on some of his reform promises, since he hasn&#39;t assigned ministerial posts to his coalition, Loh said.&nbsp;
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Media

Should Investors Consider Emerging Markets, Asia? These 2 Pros Say Yes

Admittedly, the time frame is small and the full benefits of owning low volatility stocks and exchange-traded funds are best measured over the long term. Over the past month, however, low volatility emerging markets ETFs are topping their more traditional counterparts as stocks in developing economies have been caught up in the pullback seen here in the United States.
Emerging markets investors are skirting once hot cyclical sectors, such as technology, in favor of lower beta fare, including consumer staples. That&#39;s a trend that often benefits low volatility ETFs.
&ldquo;Companies whose fortunes are closely tied to economic growth, such as those making car parts, have fallen out of favor in the past month,&rdquo; <a href="https://www.bloomberg.com/news/articles/2018-04-03/stock-rotation-comes-to-emerging-markets-as-defensives-take-lead">reports Bloomberg</a>. &ldquo;Firms whose products are in demand regardless of economic cycles (no matter what, people will shave) are rallying in their stead.&rdquo;
<h3>
	Data Confirmation</h3>
From March 1&nbsp;through April 3, the MSCI Emerging Markets Index lost a tenth of a percent. That&#39;s better than the 2.2 percent lost by the S&amp;P 500 over the same period, but some emerging markets ETFs are doing better than both of those widely followed indexes.
The iShares Edge MSCI Min Vol Emerging Markets ETF (CBOE:EEMV) and the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>) are up an average of 2 percent over that period.
And yes, EELV and EEMV are doing their jobs when it comes being lower volatility bets. Again, one month isn&#39;t the appropriate measuring stick for volatility reduction strategies, but from March 1&nbsp;through April 3, the average volatility on EELV and EEMV <a href="https://www.etfreplay.com/charts.aspx">was about 16 percent</a> compared to almost 24 percent for the MSCI Emerging Markets and nearly 21 percent on the S&amp;P 500.
<h3>
	Some Surprises</h3>
With investors avoiding emerging markets technology stocks, it can be considered surprising that EEMV is trading higher since early March. That ETF allocates over 23 percent of its weight to tech, its second-largest sector weight. Lower beta consumer staples and telecommunications names combine for over 20 percent of EEMV&#39;s roster.
For its part, the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio has an almost 13 percent consumer staples weight but devotes just 7.58 percent to tech stocks.
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EELV

Low Volatility EM ETFs Are Doing Their Jobs

Ex-U.S. equity exchange-traded funds have been popular destinations for investors for over a year, but some investors like the idea of skirting volatility in international markets. This is particularly true with emerging markets stocks.
The iShares Edge MSCI Min Vol Emerging Markets ETF (CBOE:EEMV) is one of the premier ways for skittish investors to embrace emerging markets equities while reducing volatility. EEMV, which is about six and a half years old, follows the MSCI Emerging Markets Minimum Volatility Index. That benchmark aims to hold stocks with lower volatility traits than the MSCI Emerging Markets Index.
The rub with many low volatility strategies is that their upside capture rate isn&#39;t intended to be 100 percent. Conversely, these funds usually perform less poorly in bear markets. Over the past three years, the MSCI Emerging Markets Index has outperformed EEMV by a margin of better than 2-to-1.
<h3>
	How EEMV Trims Volatility</h3>
Different low volatility ETFs, regardless of emphasized geography, use different volatility-reducing methodologies.
EEMV &ldquo;uses an optimizer to construct the least-volatile portfolio possible using constituents of the MSCI Emerging Markets Index under a set of constraints,&rdquo; Morningstar said&nbsp;<a href="http://www.morningstar.com/articles/854115/an-emergingmarkets-fund-that-takes-less-risk.html">in a recent note</a>. &ldquo;The optimizer takes into account each stock&rsquo;s volatility and how they interact with each other to affect the portfolio&rsquo;s volatility. It uses this information to select and weight stocks from the parent index. However, the fund limits sector and country tilts relative to the MSCI Emerging Markets Index, exposure to individual names, and turnover, which reduces transaction costs.&rdquo;
Low volatility emerging markets ETF are often lightly allocated to commodities-sensitive economies. For example, EEMV allocates just 3.3 percent of its combined weight to Brazil and South Africa. Plus, the ETF has no exposure to oil-heavy Russia.
<h3>
	Getting Defensive</h3>
Standard emerging markets benchmarks are heavily allocated to technology and financial services stocks, but low volatility ETFs, such as EEMV, lean defensive.
&ldquo;Unsurprisingly, this fund&rsquo;s sector allocation leans heavily toward defensive sectors, such as healthcare, utilities, and consumer defensive, compared with the category average,&rdquo; said Morningstar. &ldquo;Stocks in these three sectors account for 28 percent of the fund&rsquo;s portfolio compared with the less-than-16 percent category average. This helps minimize volatility associated with economic risk. Similarly, this fund has a significantly lower allocation to sectors strongly affected by economic shifts, such as basic materials, consumer cyclical, financial services, and real estate.&rdquo;
Over the past three years, EEMV has been 500 basis points less volatile than the MSCI Emerging Markets Index. During that period, EEMV&#39;s maximum drawdown was 550 basis points less than the developing world benchmark.
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The Low Volatility Way To Play Emerging Markets

Earlier this year, the low volatility factor was the object of much attention and adulation, and that affection was not limited to U.S.-focused exchange-traded funds.
<h3>iShares EEMV</h3>
The iShares Edge MSCI Min Vol Emerging Markets ETF, iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>) also caught investors&#39; attention, as many looked to lower risk alternatives to get involved with emerging markets equities <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/04/7888301/low-volatility-is-working-here-too">as the asset class rebounds </a>following several years of lackluster returns.
As is the case with U.S.-focused low volatility ETFs, it is reasonable to expect an international equivalent, such as EEMV, to lag traditional funds when the target asset class is overtly rallying. And that is what emerging markets stocks are doing this year. Likewise, it should be expected that when emerging markets stocks slump, EEMV will perform less poorly, which the fund did last year.
<h3>Mitigating Volatility</h3>
EEMV, &ldquo;which offers exposure to these historically volatile stocks while mitigating the magnitude of the ups and downs, might be worth considering for those who want to tap into these markets without getting whipsawed,&rdquo; said Morningstar <a href="http://beta.morningstar.com/articles/781784/a-smoother-but-still-bumpy-emerging-markets-ride.html">in a recent note</a>. &ldquo;In fact, since EEMV&rsquo;s inception in October 2011 through October 2016, it has outperformed the MSCI Emerging Markets Index by 2.26 percentage points, annualized. Over the same period, EEMV had nearly 25 percent less volatility relative to the market-cap-weighted MSCI Emerging Markets Index.&rdquo;
However, the low volatility rub is being epitomized by EEMV this year. With emerging markets stocks rebounding, EEMV is higher by just 4.2 percent, less than half the 10.4 percent gained by the MSCI Emerging Markets Index year-to-date. EEMV has been nearly 600 basis points less volatile than the traditional emerging markets benchmark.
<h3>Exposures</h3>
Explaining EEMV&#39;s laggard status is not difficult. As a low volatility emerging markets ETF, EEMV allocates barely more than 2 percent of its combined weight to Brazil and Russia, two of the most volatile developing economies. However, those are two of this year&#39;s best-performing emerging markets.
Overall, EEMV&#39;s Latin America exposure is just about 9 percent, a disadvantage at a time when that region is lifting emerging markets benchmarks higher.
<h3>EEMV's Strategy</h3>
&ldquo;EEMV uses an optimizer to construct the least volatile portfolio possible using constituents of the MSCI Emerging Markets Index, under a set of constraints. The optimizer considers each stock&rsquo;s volatility in addition to how the correlation between stocks affects the portfolio&rsquo;s volatility. It uses this information to select and weight stocks from the parent index,&rdquo; added Morningstar.
To be fair, EEMV outperformed the MSCI Emerging Markets Index 230 basis points over the past three years, a mostly rough period for emerging equities.

Shares of Msci Inc (NYSE: <a class="ticker" href="/stock/msci#NYSE">MSCI</a>), one of the largest providers of indexes for use by issuers of exchange-traded funds, are up about 2 percent in midday trading after the company revealed soaring growth for its factor-based benchmarks.
At the end of the third quarter, global factor-based ETFs had attracted $51 billion in new assets year-to-date with $17.5 billion, more than a third, of that total flowing to ETFs tracking MSCI indexes, according to the index provider. There is now more than $170 billion in assets benchmarked to MSCI&#39;s factor indexes on a global basis.
Not surprisingly, low or minimum volatility indexes have been key drivers of the factor-based benchmark growth for MSCI. For example, the iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>) has seen year-to-date inflows of over $4.93 billion, a total surpassed by just nine other ETFs.
Last month, the iShares low volatility suite, which includes USMV, celebrated its fifth anniversary with $35 billion in assets under management on a global basis. However, USMV is not the only ETF contributing to the growth of MSCI&#39;s<a href="http://www.benzinga.com/trading-ideas/long-ideas/16/10/8576067/happy-anniversary-to-these-etfs"> minimum volatility benchmarks</a>.&nbsp;
<h3>Other ETFs Helping MSCI's Minimum Volatility Benchmarks</h3>
The iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>) has raked in more than $1.33 billion in new assets this year, as investors have sought alternatives to traditional emerging markets ETFs. EEMV follows an MSCI index that is<a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7955969/low-volatility-em-etfs-are-outperforming-too"> the developing markets equivalent</a> of the U.S.-focused index tracked by USMV.
The iShares Edge MSCI Min Vol EAFE ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>), which follows the MSCI EAFE Minimum Volatility (USD) Index, has added $3.2 billion in new assets this year, a significant chunk of its $7.2 billion in assets under management.
In 2011, ETFs following MSCI indexes controlled just six percent of assets under management allocated to low or minimum volatility strategies, but that number has swelled to 68 percent as of the end of the third quarter, according to MSCI data.
While low volatility strategies have commanded ample attention this year, MSCI does offer indexes for other investment factors, including <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/11/8688623/marvel-at-momentum-with-this-etf">momentum, quality and value</a>.
<h3>MSCI And Other Investment Factors</h3>
For example, momentum investors can consider the iShares Trust (NYSE: <a class="ticker" href="/stock/mtum#NYSE">MTUM</a>).
MTUM tracks the MSCI USA Momentum Index and there is little in the way of perceived momentum surprises in the ETF or its underlying benchmark. Investors should look elsewhere if they want an ETF heavy on telecommunications or utilities stocks. Likewise, because these sectors have displayed less-than-impressive momentum traits, MTUM offers only token industrials and materials exposure while holding no energy stocks.

Broad U.S. Equity ETFs

Movers

EFAV

MSCI

MTUM

USMV

Factor-Based Indexes Drive Growth For MSCI

Anniversaries for exchange-traded funds are not always worth celebrating, but with the iShares Edge MSCI Min Vol USA ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)) and some of its iShares low volatility stablemates, this is an anniversary worth celebrating.
<h3>Half A Decade Of ETF Success For These 4</h3>
The iShares low volatility suite celebrated its fifth anniversary Tuesday with $35 billion in assets under management on a global basis. Making that statistic all the more impressive is the fact that investors have pumped $14 billion into iShares low volatility ETFs, including USMV this year. With year-to-date inflows of nearly $5.5 billion, USMV is 2016&#39;s eighth-best asset-gathering ETF.
USMV&#39;s stablemates include the $4.4 billion iShares Edge MSCI Min Vol Emerging Markets ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)), the $7.9 billion iShares Edge MSCI Min Vol EAFE ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>) and the $3.2 billion iShares Edge MSCI Min Vol Global ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>). Like USMV, ACWV, EEMV and EFAV debuted in October 2011.
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As is the case with U.S.-focused low volatility ETFs, it is reasonable to expect an international equivalent, such as EEMV, to lag traditional funds when the target asset class is overtly rallying. And that is what emerging markets stocks are doing this year. Likewise, it should be expected that when emerging markets stocks slump, EEMV will perform less poorly, which the fund did last year.
<h3>Some Fun Stats</h3>
EEMV&#39;s recipe for volatility reduction is not a surprise. For example, Brazil and Russia are two of the most volatile emerging markets and only represent a fraction of EEMV&#39;s lineup. Conversely, the ETF is heavily allocated to low beta developing economies, including South Korea and Taiwan.
Here is an interesting statistic courtesy of <a href="http://altavista-research.com/">AltaVista Research</a>: Combined assets under management for low and minimum volatility exchange-traded funds reside around $44 billion today, up from $1 billion at the end of 2011.
On a related note, USMV is the fastest iShares ETF to reach $10 billion in assets under management, an impressive statistic when considering the sheer size of the issuer&#39;s lineup, which is the ETF&#39;s industry largest.
&ldquo;All of the iShares Min Vol ETFs celebrating their five year anniversary have delivered market-like returns, but with 15&ndash;20 percent less risk since their launch,&rdquo; said iShares in a statement. &ldquo;Since inception, USMV is in the top 1 percent of all large-cap domestic equity ETFs and mutual funds by risk adjusted returns.&rdquo;
<h3>A Few iShares Low Volatility ETF Peers</h3>
Other iShares low volatility ETFs include the iShares Edge MSCI Min Vol Japan ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/jpmv#NYSE">JPMV</a>) and the newly minted iShares Edge MSCI Min Vol USA Small-Cap ETF (iShares Trust ETF (NYSE: SMMV)).
<a href="https://pro.benzinga.com/?utm_source=Benzinga&amp;utm_medium=Benzinga%20Top%20of%20Article&amp;am%22%3">Full ratings data available on Benzinga Pro.</a>
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ACWV

JPMV

Happy Anniversary To These ETFs

One of the most prominent themes in the world of exchange-traded funds this year is investors&#39; love affair with low volatility strategies, including the iShares Edge MSCI Min Vol USA ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)) and the PowerShares S&amp;P 500 Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>)).
In fact, low volatility ETFs, primarily aided by the assets pouring into USMV and SPLV, are among this year&#39;s most popular smart beta funds. A basic premise of low-volatility ETFs is that they should be less bad than their traditional rivals when markets sag &mdash; the rub being a fund such as SPLV will leave some returns on the table when equities soar. Living in the current market environment, SPLV and rival low-volatility ETFs are showing what they are made of.
<h3>Recent Performance</h3>
&ldquo;The ten largest exchange traded funds that are focused solely on the least volatile equities pulled in $12.30 billion of new assets in the first half of 2016, according to Factset data, higher than the $8.76 billion raised in all of 2015. Demand for these products, at $1.46 billion in inflows in June, remained high amid investor concerns ahead of and after the Brexit vote,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a note out Monday.
The success of low volatility ETFs this year is not confined to large-cap strategies, such as those offered by SPLV and USMV. Nor is it confined to U.S. borders.
<h3>Looking More Broadly</h3>
For example, the iShares Edge MSCI Min Vol USA ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) is providing investors with a solid alternative to traditional emerging markets ETFs. Additionally, the PowerShares S&amp;P MidCap Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/xmlv#NYSE">XMLV</a>)) <a href="http://www.benzinga.com/news/16/06/8085988/mid-caps-like-the-low-volatility-treatment-too">is thriving</a>.
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Working on the premise that low volatility works for bigger stocks and that mid and small caps are usually more volatile, it can be discerned that the application of a low volatility strategy outside the large-cap space can be rewarding. XMLV is proving as much as it is one of this year&#39;s best-performing mid-cap ETFs.
&ldquo;XMLV gathered $349 million of new money in the first half of 2016. Approximately half of the fund&rsquo;s assets are in financials stocks, with insurance companies Brown &amp; Brown (BRO) and REITs such Weingarten Realty Investors (WRI) widely held; both stocks have above-average Quality Rankings of A-. Utilities and materials stocks are also well represented,&rdquo; said S&amp;P Capital IQ.
The research firm has Overweight ratings on SPLV, USMV and XMLV and a Market-Weight rating on EEMV.
&ldquo;Despite different construction, USMV and SPLV have similarly low 0.72 and 0.73 three-year betas relative to the S&amp;P 500 index; EEMV and XRLV have modest betas of 0.79 and 0.75, despite focusing on traditionally riskier emerging markets and mid-cap investment style,&rdquo; added S&amp;P Capital IQ.
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Analyst Color

Analyst Ratings

PowerShares S&P 500 Low Volatility Portfolio

SPLV

XMLV

A Low Vol ETF Love Affair

Maybe it is a case of not letting exchange-traded funds such as the PowerShares S&amp;P 500 Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>)) have all the fun, but emerging markets equivalents are joining their U.S.-focused low volatility counterparts in outperforming traditional benchmarks this year.
While investors are being led to believe this an incredible year for emerging markets equities, the widely followed MSCI Emerging Markets Index is up just 0.7 percent year-to-date. That pales in comparison to the returns offered by the iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) and the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>)).
<h3>A Closer Look AT EELV And EEMV</h3>
EELV and EEMV are up 5.4 percent and 1.8 percent, respectively, year-to-date. Importantly, the time could be right to consider these funds because &ldquo;sell in May&rdquo; can apply to emerging equities, too.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7948900/why-this-low-volatility-etf-just-keeps-chugging-along">Why This Low Volatility ETF Just Keeps Chugging Along</a></bzrelatedlink>
&ldquo;The May through October seasonal softness, often referred to as the &#39;Sell in May&#39; period, is not just a U.S., large-cap phenomenon according the Sam Stovall, Equity Strategist for S&amp;P Global Market Intelligence. Since 1998, the S&amp;P Emerging BMI Index advanced an average of 11.5 percent, from November and April but declined 0.2 percent in May and October. However, the S&amp;P BMI Low Volatility Emerging Markets index was up 1.0 percent on average during this May to October period,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a note out Monday.
<h3>Country And Sector Differences</h3>
Wide return discrepancies between EELV and EEMV underscore some important country- and sector-level differences between the two ETFs. For example, EEMV&#39;s country lineup is almost predictable, although that is not a bad thing, with a combined weight of almost 29 percent to Taiwan and South Korea, historically two of the <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7948918/quality-works-for-this-emerging-markets-etf">least volatile emerging markets</a>.
EELV allocates 26.8 percent of its combined weight to those two low beta emerging markets, but the PowerShares ETF&#39;s weight to Malaysia, another historically low beta developing market, is nearly 600 basis points more than that of its iShares rival.
China exposure between the two ETFs varies in a big way. EEMV has an 18.2 percent weight to Chinese stocks, making that country the ETF&#39;s biggest geographic weight. On the other hand, EELV devotes just 3.5 percent to China, making it that fund&#39;s smallest country exposure.
&ldquo;As their names imply, these ETFs have generated below-average volatility relative to the iShares MSCI Emerging Markets Index ETF (EEM). As of the end of April 2016, EEMV&rsquo;s and EELV&rsquo;s standard deviation of 13.0 and 13.8 were lower than EEM&rsquo;s 16.4. Though EELV has been the better performer to start to 2016, it lost more money in 2015 (19 percent vs. 12 percent for EEMV),&rdquo; added S&amp;P Capital IQ.

Low Volatility EM ETFs Are Outperforming, Too

Investors are hearing plenty this year about the boffo performances turned in by low volatility exchange-traded funds. They are also hearing quite a bit about the resurgence of emerging markets stocks and ETFs.
Marry those two themes and the result is a perfect explanation as to why the iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) is up 6.5 percent year-to-date. While EEMV is lagging the iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) by 130 basis points, that does not mean the case for EEMV is extinct.
<h3>Low Volatility ETFs, Here And Abroad</h3>
As is the case with U.S.-focused low volatility ETFs, it is reasonable to expect an international equivalent, such as EEMV, to lag traditional funds when the target asset class is overtly rallying. And that is what emerging markets stocks are doing this year. Likewise, it should be expected that when emerging markets stocks slump, EEMV will perform less poorly, which the fund did last year.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/04/7871045/evaluating-tracking-error-concerns-and-low-volatility-etfs">Evaluating Tracking Error Concerns And Low Volatility ETFs</a></bzrelatedlink>
&ldquo;This strategy has had a good track record. During the trailing 15- and 10-year periods through March 2016, this fund&#39;s underlying index generated about 400 basis points of annualized outperformance versus the cap-weighted MSCI Emerging Markets Index, with significantly lower volatility,&rdquo; said Morningstar <a href="http://news.morningstar.com/articlenet/article.aspx?id=668065">in a recent note</a>.
<h3>What Sets EEMV Apart?</h3>
Indeed, EEMV makes good on the low volatility promise. The ETF&#39;s <a href="https://www.ishares.com/us/products/239641/EEMV?referrer=tickerSearch">three-year standard deviation</a> of 13.3 percent is 330 basis points below the same metric on EEM.
EEMV&#39;s recipe for volatility reduction is not a surprise. For example, Brazil and Russia are two of the most volatile emerging markets and only represent a fraction of EEMV&#39;s lineup. Actually, the ETF features no Russia exposure while allocating less than 1.4 percent to Brazilian stocks.
On the other hand, historically low beta developing economies Malaysia, South Korea and Taiwan combine for about 38 percent of EEMV&#39;s geographic weight. Of the 17 countries represented in EEMV, China commands the largest weight at nearly 18.5 percent.
&ldquo;Thanks in part to the heterogeneity of the emerging-markets equity asset class, low-volatility strategies in emerging markets have historically resulted in a greater reduction in portfolio volatility relative to a cap-weighted index than in U.S. equities. In other words, there is more diversity (lower correlations) among emerging-markets equities, which allows for greater reduction in price fluctuations in an emerging-markets low-volatility portfolio,&rdquo; added Morningstar.
EEMV has a rival in the form of the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>)). EELV is up 11.5 percent year-to-date, an advantage that is largely attributable to the ETF&#39;s overweight position in rebounding South African stocks.

Low Volatility Is Working Here, Too

Following several years of struggles, emerging markets exchange traded funds are doing little to foster confidence among investors through the first two months of 2016. For example, the Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and the iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), the two largest emerging markets ETFs, are each down 6 percent year-to-date.

	Soon after the widely followed MSCI Emerging Markets Index began swooning in earnest five years ago, investors have continually heard that developing world equities are inexpensive relative to their developed market counterparts.

	While that is true, compelling valuations have not been enough to bolster emerging markets stocks, nor have those discounts been enough to prevent advisors and investors from departing emerging markets ETFs.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/02/6543703/a-buying-opportunity-with-homebuilders-etfs">A Buying Opportunity With Homebuilders ETFs</a>

	So developing economy equities stocks and ETFs, such as EEM and VWO, have the look of value plays, but after stomaching a multi-year bear market in these names, investors are left wondering what the best course of action is right now.
<h3>
	Don&#39;t Dump Too Soon</h3>

	&quot;Generally speaking, it is not a good idea to dump an asset class when times are tough. But it might be helpful to dig into what&rsquo;s been happening over the past few years, to get a better understanding of the complicated dynamics that drive the performance of emerging-markets funds,&quot; said Morningstar <a href="http://news.morningstar.com/articlenet/article.aspx?id=741729">in a recent note</a>.

	The <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/02/6271048/guess-what-emerging-markets-etfs-are-cheap">worst-performing emerging markets</a> have been commodities exporters, as Morningstar notes. Falling commodities prices compound equity market troubles for the likes of Brazil, Russia and South Africa by weakening currencies and leading to external debt vulnerabilities.

	&quot;The price declines in emerging-markets funds may suggest that valuations are growing more attractive. Unfortunately, much of the declines were a result of negative currency translation effects,&quot; adds Morningstar.

	Brazil and Malaysia have been plagued with corruption issues while slumping emerging markets technology stocks have been drains on South Korea and Taiwan, among others.
<h3>
	Want To Wait?</h3>

	The iShares MSCI Emerging Markets Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5987035/waiting-for-godot-emerging-markets-etfs-try-to-get-it-togethe"> is one option </a>for investors looking to remain in the game while waiting for emerging markets equities to bounce back. EEMV is not perfect, but it has been noticeably less bad than EEM and VWO. Year-to-date, EEMV is down just 3.3 percent.

	As a low volatility ETF, EEMV avoids the most volatile emerging markets, meaning the ETF has only token exposure to Brazilian stocks and no weight to Russia.

Short Ideas

What To Do With Emerging Markets ETFs?

Flows data confirm that advisors and investors were partial to international equity-traded funds last year. Six of 2015&#39;s top 10 asset-gathering ETFs were international equity funds, while just two &ndash; the Vanguard 500 Index Fund (NYSE: <a class="ticker" href="/stock/voo#NYSE">VOO</a>) and the Vanguard Total Stock Market ETF (NYSE: <a class="ticker" href="/stock/vti#NYSE">VTI</a>) &ndash; were U.S. equity funds.
Still, more than half of the world&#39;s combined equity market capitalization is found in the United States, a factor that contributes to home country investors. Then there is volatility. Foreign equities, even some hailing from developed markets, have a tendency to be more volatile than their U.S. counterparts.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6108951/ishares-wins-2015-race-for-global-etf-inflows">iShares Wins 2015 Race For Global ETF Inflows</a></bzrelatedlink>
&ldquo;There could also be good reasons for U.S. investors to overweight U.S. stocks. For example, U.S. stocks should serve as a better long-term hedge against U.S. inflation than foreign stocks. Currency fluctuations can also make foreign stocks more volatile, as a strengthening U.S. dollar detracts from their returns. During the past decade, currency fluctuations accounted for nearly a quarter of the total volatility of the foreign developed-markets stocks in the MSCI EAFE Index. Consequently, foreign stocks can be tougher to own,&rdquo; according to a recent <a href="http://news.morningstar.com/articlenet/article.aspx?id=735238">Morningstar note</a>.
<h3>EEMV</h3>
The iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) has become popular with investors if for no other reason than that trimming volatility with developing world stocks results in an ETF that has been <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5943650/ditching-volatility-with-emerging-markets-etfs">less bad</a> than traditional emerging markets funds.
Low volatility in emerging markets usually means large weights to Malaysia, South Korea and Taiwan. Those countries combine for almost 38 percent of <a href="http://www.ishares.com/us/products/239641/EEMV">EEMV&#39;s weight</a>. EEMV has a developed market equivalent in the form of the $4.3 billion iShares MSCI EAFE Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>). 
<h3>EFAV</h3>
&ldquo;EFAV attempts to construct a low-volatility portfolio by selecting stocks from the MSCI EAFE Index. To do this, it uses a constrained optimization approach that takes into account individual stock volatilities as well as the correlations among them. The constraints limit the size of individual positions and the fund&#39;s sector and country tilts relative to the MSCI EAFE Index. EEMV follows a similar approach in emerging markets,&rdquo; according to Morningstar.
EFAV allocates nearly 53 percent of its combined weight to Japan and the UK. The ETF has a beta of 0.68 and a standard deviation of nearly 10.4 percent, <a href="https://www.ishares.com/us/products/239626/EFAV">according to iShares data</a>. 
EFAV is up 3 percent over the past year, while the MSCI EAFE Index is down 5.3 percent. In November, iShares introduced a currency hedged answer to EFAV, the iShares Currency Hedged MSCI EAFE Minimum Volatility (BATS: HEFV), along with five other <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5956577/ishares-makes-a-big-currency-hedged-low-volatility-splash">currency-hedged minimum volatility ETFs</a>.
&ldquo;So far, EFAV has accomplished what it set out to do. Since its inception in 2011, this fund exhibited nearly a quarter less volatility than the MSCI EAFE Index. In fact, its volatility was comparable to VTI&#39;s, despite its unhedged currency exposure. EEMV exhibited a similar reduction in volatility relative to its parent benchmark, though not surprisingly, it was still more volatile than VTI,&rdquo; said Morningstar.
Image Credit: <a href="https://pixabay.com/en/coins-money-ruble-salary-map-990693/">Public Domain</a>

News

Intraday Update

HEFV

International ETF Ideas For Conservative Investors

In quite possibly unsurprising news for those following the exponential growth of the exchange-traded funds industry, BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>) says institutional investors are increasing their use ETFs.
BlackRock, the parent company of iShares, the world&#39;s largest ETF issuer, confirmed the findings in its 2015 Institutional Usage Report out Friday. The report provided insights into ETF usage trends across 814 pensions, foundations, endowments, asset managers, consultants and insurers, said BlackRock. According to the report's findings, managing volatility is a primary reason why so many institutional investors are boosting their use of ETFs.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/6006878/smart-beta-etfs-are-growing-at-a-staggering-pace">Smart Beta ETFs Are Growing At A Staggering Pace</a></bzrelatedlink>
<h3>The Report's Findings</h3>
&ldquo;In 2015, across all client types, almost a quarter of respondents cited volatility as their main investment challenge. Asset owners such as consultants and pensions,foundations, and endowments were the largest client segment to report this as their main investment challenge, while far fewer asset managers and insurance companies appear to be concerned,&rdquo; said BlackRock.
<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5943650/ditching-volatility-with-emerging-markets-etfs">Year-to-date, investors have poured</a> $1.1 billion in new assets into the iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) and $2.9 billion into the iShares MSCI USA Minimum Volatility ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)). 
<h3>Smart Beta On The Rise</h3>
As other reports out this year support, BlackRock&#39;s 2015 Institutional Usage Report shows professional investors continue warming to smart beta ETFs. Nearly 20 percent of institutional investors surveyed by BlackRock are expected increase usage of smart beta ETFs next year.
&ldquo;Challenges addressing volatility suggest that clients are seeking efficient solutions such as minimum volatility strategies as well as other risk-adjusted smart beta strategies. While only 10 percent of respondents reported current allocations to smart beta ETFs, 19 percent reported that they are likely to invest in smart beta ETFs in the next year&mdash;the largest expected increase out of any asset class in question,&rdquo; said BlackRock.
According to FTSE Russell&rsquo;s first U.S. retail financial advisor market survey "<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors," 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic beta approaches.
BlackRock&#39;s iShares unit is one of the largest issuers of smart beta ETFs, thanks in large part to funds such as the iShares MSCI USA Momentum Factor ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/mtum#NYSE">MTUM</a>)), ISHARES MSCI USA QUALITY FACTOR ETF (BMV: QUAL) and the ISHARES MSCI USA VALUE FACTOR ETF (BMV: VLUE).
Those ETFs have about $3.5 billion in combined assets under management, roughly $1.5 billion of which <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5871033/the-survey-says-advisors-love-smart-beta-etfs">has flowed</a> into the funds this year. 
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5999187/deutsche-unveils-two-enhanced-beta-etfs">Deutsche Unveils Two Enhanced Beta ETFs</a></bzrelatedlink>
<h3>ETFs As Vehicles For Beta</h3>
ETFs are also making inroads into territory previously dominated by futures contracts. Due to increased regulations, namely higher capital requirements, rolling futures contracts has become more expensive. As a result, some professional traders are turning to ETFs as an avenue for beta.
&ldquo;Futures&mdash;one of the traditional instruments of choice for institutional investors looking for beta&mdash;face headwinds driven by the increased cost of capital applicable to banks under the Basel framework and the Volcker rule.
&ldquo;As a result, over the last 12&ndash;15 months, many futures investors may have experienced a noticeable increase in the cost of rolling their contracts, causing them to seek lower-cost alternatives to futures,&rdquo; said BlackRock.
Image Credit: <a href="https://pixabay.com/en/analysis-trading-forex-515243/">Public Domain</a>

Sector ETFs

Futures

QUAL

VLUE

BlackRock Says Pros Are Increasing Use Of ETFs

Barring a turnaround of epic proportions, this will go down as another disappointing year for emerging markets equities and the corresponding exchange-traded funds.
 With just over 40 days left in 2015, the Vanguard Emerging Markets Stock Index Fd (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and the iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), the two largest emerging markets ETFs, are off an average of 11.4 percent year-to-date.
<h3>Single-Country Emerging Markets ETFs</h3>
An array of single-country emerging markets ETFs, (looking at you, iShares MSCI Brazil Index (ETF) (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>)) have been far worse than EEM and VWO. In the absence of the aforementioned epic rally, 2015 will be the third consecutive year in which EEM and VWO have trailed the S&amp;P 500 and the MSCI EAFE Index, as well as being the fourth year in the past five.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5981415/just-how-inexpensive-are-emerging-market-etfs">Just How Inexpensive Are Emerging Market ETFs?</a></bzrelatedlink>
<h3>Emerging Markets And The Investor</h3>
So, it is not surprising that investors&#39; patience is being tested with emerging markets stocks. Nor is it surprising those investors are losing patience. For example, EEM and VWO have bled over $9.1 billion in assets this year. With the Federal Reserve positioned to raise interest rates next month, emerging markets ETFs could suffer additional outflows.
&ldquo;But when investors believe the Fed will, in fact, raise rates sooner than that, they may very well reduce their EM exposure. We saw this in early November, when a positive labor market report caused investors&rsquo; expectations of the probability of a Fed hike in December to rise from 56 percent on November 5 to roughly 70 percent the following day as measured by the pricing of federal funds futures, according to Bloomberg.
&ldquo;EM stocks sold off on the news, with the index down roughly 4 percent since November 5, based on Bloomberg data as of November 9,&rdquo; <a href="http:// https://www.blackrockblog.com/2015/11/17/emerging-market-stock-performance/">reported an iShares note</a>.
ETFs with exposure to developing economies with sovereign credit issues, such as EWZ and the Ishares Msci Turkey Inv Market Index Fd (NYSE: <a class="ticker" href="/stock/tur#NYSE">TUR</a>), are seen as especially vulnerable to hawkish changes in Fed policy. The iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)) can help investors ameliorate that scenario.
<h3>Looking At EEMV</h3>
EEMV has been <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5943650/ditching-volatility-with-emerging-markets-etfs">slightly less bad</a> than traditional, diversified emerging markets ETFs this year.
 Low volatility in emerging markets usually means large weights to Malaysia, South Korea and Taiwan. Those countries combine for almost 38 percent of <a href="http://www.ishares.com/us/products/239641/EEMV">EEMV&#39;s weight</a>, well above the roughly 31 percent EEM allocates to that trio. 
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5974349/getting-contrarian-with-emerging-market-etfs">Getting Contrarian With Emerging Markets ETFs</a></bzrelatedlink>
EEMV is down 10.2 percent this year, but the ETF has avoided the outflows bug on its way to adding over $1.1 billion in new assets. With negligible exposure to the most volatile emerging markets (EEMV&#39;s weight to Brazil is scant and Russia is not featured in the portfolio), EEMV is a conservative avenue to emerging markets at a time of contracting earnings and a possible Fed rate hike.
&ldquo;Whether a Fed rate rise comes before December 31 or not, it&rsquo;s likely to come eventually. In addition, many EMs are forecasted to continue to experience weak economic growth and geopolitical issues. So while EM valuations are relatively cheap, they may remain cheap for some time, and could even get cheaper from here,&rdquo; added iShares. 
Image Credit: <a href="https://pixabay.com/en/analysis-trading-forex-515243/">Public Domain</a>

iShares MSCI Turkey Investable Market Index Fund

Waiting For Godot: Emerging Markets ETFs Try To Get It Together

There are at least two certainties regarding emerging markets stocks and exchange traded funds. First, 2015 is set to be another year of slack performance for emerging markets ETFs as the Vanguard FTSE Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and the iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) are off an average of 12 percent.

	Second, throughout much of this now multi-year emerging markets slump, investors keep hearing how inexpensive developing world equities are. However, what appear to be compelling valuations have not been enough to lure investors back to this asset class.

	Confidence in foreign reserves usually comes with investors having confidence in a country&#39;s currency. With that in mind, it is not surprising that ETFs tracking emerging markets with weak currencies, such as the iShares MSCI South Africa ETF (NYSE: <a class="ticker" href="/stock/eza#NYSE">EZA</a>) and the iShares MSCI Brazil Capped ETF (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>) have been drubbed this year. EWZ has already endured a downgrade to Brazil&#39;s sovereign debt rating while market participants eye EZA as <a href="http://www.benzinga.com/news/15/09/5834560/turkey-etf-could-be-next-to-be-stung-by-credit-downgrade">potentially suffering a similar fate</a>.

	&quot;Per Research Affiliates&rsquo; expected return data, emerging-markets stocks (as represented by the MSCI Emerging Markets Index) had the highest expected returns of any major asset class as of the end of September. Research Affiliates&rsquo; data also show the current Schiller P/E ratio for emerging-markets stocks, at 11, its lowest level ever, and well below its median value of 19,&quot; according to a recent Morningstar research note.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5981400/ahead-of-black-friday-enthusiasm-for-retail-etfs-wanes">Ahead Of Black Friday, Enthusiasm For Retail ETFs Wanes</a>

	The iShares MSCI Emerging Markets Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>) has been&nbsp;<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5943650/ditching-volatility-with-emerging-markets-etfs">slightly less bad than traditional</a>, diversified emerging markets ETFs this year. Low volatility in emerging markets usually means large weights to Malaysia, South Korea and Taiwan. Those countries combine for almost 38 percent of <a href="http://www.ishares.com/us/products/239641/EEMV">EEMV&#39;s weight</a>, well above the roughly 31 percent EEM allocates to that trio.

	&quot;EEMV is less risky than its broad cap-weighted peers by design. This has panned out in practice recently, as evidenced by its lower drawdowns and lesser volatility relative to its market-cap-weighted peers like EEM,&quot; said Morningstar.

	Investors should keep in mind that there is always a difference between &quot;value&quot; and &quot;value trap&quot; and that is apparent in emerging markets. After all, anemic earnings growth has been a primary catalyst in driving developing world equity valuations lower. Brazil and EWZ arguably have sported the value trap look this year.

	&quot;EWZ is now trading at a level lower than where it bottomed out at the nadir of the global financial crisis, as local equities have hit the skids and the value of the Brazilian real has fallen,&quot; according to Morningstar.

	The largest Brazil ETF is down 33.3 percent year-to-date.

Just How Inexpensive Are Emerging Market ETFs?

BlackRock, Inc. (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>)'s iShares unit, the world&#39;s largest issuer of exchange-traded funds, made a major splash Monday in the marriage of two hot ETF themes &ndash; currency hedging and low volatility &ndash; with the introduction of five such funds.
&ldquo;Four of the five funds are currency hedged versions of existing iShares minimum volatility ETFs, part of BlackRock&rsquo;s range of iShares smart beta ETFs. iShares minimum volatility ETFs are designed to help investors weather the ups and downs of the market whilst staying invested, offering the potential for lower risk and long term growth,&rdquo; said <a href="http://www.ishares.com/us/">iShares</a> in a statement.
<h3>New Names</h3>
The new ETFs from iShares include: 
<ul>
<li>iShares Currency Hedged MSCI ACWI Minimum Volatility (NYSE: HACV)</li>
<li> iShares Currency Hedged MSCI EAFE Minimum Volatility (NYSE: HEFV)</li>
<li> iShares Currency Hedged MSCI EM Minimum Volatility ETF (NYSE: HEMV)</li>
<li>iShares Currency Hedged MSCI Europe Minimum Volatility (NYSE: HEUV)</li>
<li> iShares Currency Hedged MSCI Europe Small-Cap ETF (NYSE: HEUS)</li>
</ul>

<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/pressreleases/15/10/b5950171/bats-exchange-selected-as-listing-destination-for-three-new-wisdomtree-">BATS Exchange Selected As Listing Destination For Three New WisdomTree ETFs</a></bzrelatedlink>
<h3>Not Just NYSE; BATS Global Markets Ahead</h3>
The introduction of those ETFs is also a boon for BATS Global Markets, which has been looking to bolster the number of ETFs it lists. All five of the new iShares ETFs will trade on BATS. Last week, it was reported that two SPDR ETFs are moving to BATS and three new WisdomTree ETFs also debuted on BATS. Nearly 25 iShares ETFs trade on BATS, accounting for roughly two-thirds of the exchange&#39;s ETF listings.
<h3>Associated Unhedged Parent iShares ETFs</h3>
&ldquo;Each new fund holds its unhedged &lsquo;parent&rsquo; iShares ETF and implements foreign currency forwards. They may benefit from the liquidity of the underlying iShares ETFs in which they invest, whilst also seeking to reduce the impact of international currency movements relative to the U.S. dollar. U.S. investors are exposed to currency risk when investing in international markets and adverse moves in exchange rates can impact performance in U.S. dollar terms,&rdquo; according to iShares.
HACV holds the iShares MSCI All Country World Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>)), while HEFV is the currency hedged answer to the iShares MSCI EAFE Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>). HEMV is the currency hedged equivalent <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5943650/ditching-volatility-with-emerging-markets-etfs">of the increasingly popular</a> iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)), while HEUV holds the iShares MSCI Europe Minimum Volatility ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/eumv#NYSE">EUMV</a>)). HEUS holds the iShares MSCI Europe Small-Cap ETF (NASDAQ: <a class="ticker" href="/stock/ieus#NASDAQ">IEUS</a>).
Led by the $6.5 billion iShares MSCI USA Minimum Volatility ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)), the iShares minimum volatility ETF suite has $15.1 billion in assets under management, according to the issuer. 
Image Credit: <a href="https://pixabay.com/en/chart-shares-dax-dow-jones-594212/">Public Domain</a>

Eurozone

New ETFs

Forex

EUMV

IEUS

iShares Makes A Big Currency Hedged, Low Volatility Splash

This has been one of those years when the low volatility factor, as it applies to exchange-traded funds, is proving to be a better bet than traditionally-weighted funds. For example, the PowerShares S&amp;P 500 Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>)) is higher by 2.8 percent year-to-date, an advantage of 60 basis points over the S&amp;P 500.
<h3>The Low Volatility Edge</h3>
Low volatility ETFs are not limited to the confines of U.S. borders, nor is the year-to-date performance advantage offered by these funds limited to U.S.-focused ETFs. When it comes to low volatility emerging markets ETFs, some of those products have topped their traditional counterparts, which is to say low volatility emerging markets ETFs have been <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5879073/slicing-and-dicing-the-s-p-500-with-etfs">less bad</a> than their regular rivals.
&ldquo;Emerging markets ETFs were under pressure during the first nine months of 2015 on concerns about slower economic growth and the impact of pending actions by the Federal Reserve. But in October, emerging markets have been much stronger. For those who want to stay invested in this style, but reduce their potential risk, low volatility ETFs might be appealing.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/markets/binary-options/15/09/5841163/volatility-indexes-there-are-more-out-there-than-just-the-vix">Volatility Indexes: There Are More Out There Than Just The VIX</a></bzrelatedlink>
&ldquo;Through a rules-based approach, the index the ETF seeks to track chooses the stocks that have recently exhibited the lowest volatility. But of course there are differences between these products that are worth understanding,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a new research note.
<h3>EEM And EEMV</h3>
The iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)), the low volatility answer to the popular iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), is down 3.9 percent this year. EEMV&#39;s loss, though nothing to brag about, is only half as bad as EEM&#39;s.
Low volatility in emerging markets usually means large weights to Malaysia, South Korea and Taiwan. Those countries combine for almost 38 percent of <a href="http://www.ishares.com/us/products/239641/EEMV">EEMV&#39;s weight</a>, well above the roughly 31 percent EEM allocates to that trio.
&ldquo;The $2.85 billion EEMV &ldquo;holds 258 stocks in the broader MSCI emerging markets index that have below-average volatility. However, there are both sector and country bands that stay within 5 percent of the parent index at the semi-annual rebalance. The goal is to get a low volatility portfolio without introducing a potential concentration either by sector or country,&rdquo; noted S&amp;P Capital IQ.
EEMV has a rival in the form of the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>)). EELV has trailed EEMV this year and a large part of that can be tied to EELV&#39;s 10.4 percent weight to struggling South African stocks, an allocation that is nearly 500 basis points above that of <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5934918/this-emerging-markets-etf-could-have-to-endure-a-credit-downg">EEMV&#39;s South Africa weight</a>.
Additionally, EELV&#39;s South Korea weight is just 4.7 percent. The ETF embraces low volatility via a combined weight of over 36 percent to Taiwan and Malaysia.
&ldquo;It is still too early to have a good read on when emerging markets will recover from the 2015 doldrums. However, we think a low volatility approach offers investors with a way to participate in the stronger growth prospects of emerging markets, while trying to reduce their risk profiles,&rdquo; said S&amp;P Capital IQ.
EELV and EEMV charge 0.29 percent and 0.25 percent per year, respectively.
Image Credit: <a href="https://pixabay.com/en/globe-earth-old-globe-940369/">Public Domain</a>

Ditching Volatility With Emerging Markets ETFs

The selling in Chinese stocks has shown no signs of abatement in recent days, as double digit losses have quickly eroded much of this year&rsquo;s gains.

	This sudden collapse has most notably affected single country exchange-traded funds such as the iShares FTSE/Xinhua China 25 Index (ETF) (NYSE: <a class="ticker" href="/stock/fxi#NYSE">FXI</a>), which has dropped more than 19 percent over the last month. While investing in specific foreign countries can be risky, even more diversified emerging market ETFs have experienced the spreading pain of China&rsquo;s drop.
<h3>The China Effect: ETFs</h3>
	The Vanguard Emerging Markets Stock Index Fd (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) and iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) have both fallen over 6 percent in the early days of July, in what appears to be a sharp correction. VWO and EEM are the largest diversified emerging market equity funds with over $73 billion in combined assets.
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	In both indices, China holds the top spot in terms of percentage allocation to a single nation. Currently publicly traded Chinese companies make up 23 percent of EEM and 28 percent of VWO. Other top emerging market countries in these indices include Taiwan, South Korea, India, South Africa and Brazil.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/07/5658084/how-chinas-crash-affects-stocks-trying-to-go-private">How China's Crash Affects Stocks Trying To Go Private</a></bzrelatedlink>
<h3>Overweight China</h3>
	The overweight nature of China&rsquo;s influence is due to the market-cap weighted construction methodology of each fund. In addition, China&rsquo;s status as a mega-economy will mean that the repercussions from a decline will be felt in other peripheral areas of the global marketplace.
<h3>Other Emerging Stocks Dealing With Volatility</h3>
	Emerging market stocks are also contending with the recent volatility in the United States Oil Fund LP (ETF) (NYSE: <a class="ticker" href="/stock/uso#NYSE">USO</a>) and PowerShares DB Base Metals Fund (ETF) (NYSE: <a class="ticker" href="/stock/dbb#NYSE">DBB</a>), which have experienced steep declines in recent weeks. Many of these nations are rich in natural resources and heavily dependent on the strength of commodity prices to sustain their burgeoning economic activity.

	One fund that has ridden the elevator down to a softer landing is the iShares MSCI Emerging Markets Minimum Volatility ETF (iShares Inc. (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)). As its name implies, this ETF selects a smaller universe of emerging market stocks with a historical penchant for lower volatility.

	While EEMV has still experienced a significant decline from its highs, it is outperforming EEM by 3.40 percent so far this year.

	Disclosure: At the time this article was written, some clients of FMD Capital Management owned shares of VWO.&nbsp; 
Image Credit: <a href="https://pixabay.com/en/yuan-rmb-currency-chinese-backside-82936/">Public Domain</a>

Emerging Market ETFs Feel The Pain Of China Collapse

2014 has been marked by interesting dynamics that include a crash in <a href="http://www.benzinga.com/topic/commodities">commodities</a>, sliding interest rates and another <a href="http://www.benzinga.com/topic/bull-market">bullish year</a> for stocks. With so many questions surrounding the fate of the markets, investors that have embraced a low volatility mindset have been rewarded for their conservatism.
<h3>
	iShares MSCI USA Minimum Volatility ETF</h3>

	The iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>) tracks approximately 160 large-cap companies from a broad pool of publicly traded equities. The goal is to produce a diversified basket of high quality stocks with fewer price fluctuations than a traditional market-cap focused index.

	With 2014 almost in the books, USMV has added a moderate 3 percent performance gain over the SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) since the beginning of the year. The chart below shows how this low volatility index also had far less draw down in the October sell off as well.
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		&nbsp;

		USMV benefits from having its largest sector allocation to <a href="http://www.benzinga.com/topic/health-care">healthcare</a>, which proved to be one of the strongest areas of the market this year. <a href="http://www.benzinga.com/topic/financials">Financials</a> and technology round out the top three rankings for this ETF.

		While low volatility strategies certainly added value in domestic markets, international funds proved to be a hit as well.
<h3>
		iShares MSCI EAFE ETF</h3>

		The iShares MSCI EAFE Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>) is the third-largest ETF in the world and biggest international offering with $51 billion in assets. EFA has fallen more than 8 percent so far this year as European worries weighed on the 900+ stocks this index.
<h3>
		iShares MSCI EAFE Minimum Volatility ETF</h3>

		By contrast, the iShares MSCI EAFE Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>) tracks a narrower subset of 200 companies and has gained less than 1 percent in 2014.
<h3>
		iShares MSCI Emerging Markets ETF</h3>

		Lastly, the iShares MSCI Emerging Markets Indx (ETF) (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) tracks over 800 stocks of emerging market countries and has fallen nearly 7 percent this year. That loss would have been somewhat mitigated through the iShares MSCI Emerging Markets Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>), which has slipped 4 percent in 2014.

		EEMV has outsized exposure to China, Taiwan and South Korea, which have helped cushion the shock of volatile countries such as Russia and Brazil.&nbsp; Additionally, EEMV has an expense ratio of just 0.25 percent compared to 0.67 percent for EEM.

		While low volatility strategies face the potential of underwhelming returns in a rapidly rising stock environment, they have proven to be worthy holdings for investors this year.

Low Volatility ETFs Dominate 2014

iShares MSCI Emerging Markets Min Vol Factor ETF declares semi-annual distribution of $0.4731

FNDE: Attractively Valued, But Overweight In China And Financials

iShares MSCI Emerging Markets Min Vol Factor ETF declares semi-annual distribution of $1.0570

This week's financial landscape was marked by a blend of bullish sentiment in specific sectors and commodities, countered by volatility in the cryptocurrency market and cautiousness in the real estate and health sectors.