iShares MSCI EAFE Min Vol Factor ETF (BATS: EFAV)

iShares MSCI EAFE Min Vol Factor ETF (BATS:EFAV), Trade Ideas

iShares MSCI EAFE Min Vol Factor ETF

iShares Edge MSCI Min Vol EAFE ETF

iShares MSCI EAFE Minimum Volatility ETF

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EFAV

Trim Risk, Keep International Exposure With This ETF

If You&#39;re Looking At International Stocks, Consider This ETF

Keep The International Stocks, Ditch The Volatility

International stocks have made a habit of trailing their U.S. counterparts. For the three years ending Sept. 5, the S&amp;P 500 is higher by 43.4%, more than double the 19.8% returned by the MSCI EAFE Index.
<h3>What Happened</h3>
While ex-U.S. developed markets have long traded at discounts to the S&amp;P 500 and other major domestic equity benchmarks, recently volatility at the hands of trade wars and other geopolitical headwinds has kept investors from embracing international equities.
One way of wading back into that pool is with the iShares Edge MSCI Min Vol EAFE ETF (CBOE: EFAV). The $11.62 billion EFAV follows the MSCI EAFE Minimum Volatility (USD) Index, the low volatility answer to the cap-weighted MSCI EAFE Index.
Year to date, EFAV and the parent index are moving in lockstep, but the iShares fund has been 280 basis points less volatile, indicating it&#39;s doing its job and while providing better risk-adjusted returns.
<h3>Why It&#39;s Important</h3>
&ldquo;This fund&rsquo;s big appeal is its ability to maintain exposure to stocks while taking less risk than the market,&rdquo; said Morningstar <a href="https://www.morningstar.com/articles/944817/a-less-risky-foreign-stock-fund">in a recent note</a>. &ldquo;It will likely lag the MSCI EAFE Index during strong bull markets but hold up better when the market declines. This should outweigh the gains that it sacrifices during market rallies and lead to better risk-adjusted performance over the long haul.&rdquo;
EFAV holds 282 stocks, significantly less than are found in the MSCI EAFE Index, but lack of depth has not hindered the fund&#39;s long-term performance since its October 2011 inception.
&ldquo;This approach has worked well. Between February 2018 and December 2018, the MSCI EAFE Index declined by 17.9% while the fund lost about half that figure,&rdquo; according to Morningstar. &ldquo;And it was 24% less volatile than the benchmark from its launch in October 2011 through May 2019. Less risk pushed its risk-adjusted returns to the top of the foreign large-blend Morningstar Category over that stretch.&rdquo;
<h3>What&#39;s Next</h3>
What could stand in the way of further upside for EFAV this year is more weakness in Eurozone economies (17% of the fund&#39;s weight) and more Brexit controversy (U.K. is 11.87% of EFAV&#39;s weight).
On the upside, EFAV allocates nearly 29% of its weight to Japan, a region where stocks are inexpensive and companies are hoarding record amounts of cash.
Morningstar has a Silver&nbsp;rating on EFAV.
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The low volatility factor and the related exchange traded funds do not miss out on 100% of the market&#39;s declines when equities falter, but the objective with these funds is to perform less poorly than their traditional rivals, explaining why many investors are embracing &ldquo;low vol&rdquo; this year.
<h3>What Happened</h3>
While low volatility and the corresponding ETFs <a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/05/13751714/how-you-can-ratchet-down-risk-with-these-popular-etfs">have been all the rage</a> in the U.S. in 2019, investors looking for international exposure can put the factor to work for them with funds such as the iShares Edge MSCI Min Vol EAFE ETF (CBOE: EFAV).
EFAV is designed to be the low volatility answer to the MSCI EAFE Index. Over the past 90 days, the minimum volatility fund is higher by 3.3% while the widely followed MSCI EAFE Index is lower by 0.10%.
Again, the reduced volatility factor is designed to minimize downside risk, not capture all of the upside in a particular market. However, EFAV only lags the MSCI EAFE Index by 70 basis points over the past three years while being 240 basis points less volatile. That is pretty good trade-off.
<h3>Why It&#39;s Important</h3>
The $11.2 billion EFAV turns eight years old in October and holds 282 stocks. The fund&#39;s three-year standard deviation of 8.67% is actually lower than that of the 12.10% found on the S&amp;P 500.
&ldquo;The other advantage that fund has is it really maintains diversification very well,&rdquo; <a href="https://www.morningstar.com/articles/939405/3-lower-risk-foreign-stock-funds">said Morningstar in a recent note</a>. &ldquo;So, they limit the percent of assets that can be allocated to a single stock and they also control their sector weighting. So, they&#39;re not going to be heavily biased like utilities, the consumer staples, you know, these traditionally stable sectors.&rdquo;
EFAV allocates over 27% of its weight to the defensive consumer staples and healthcare sectors, but it has some cyclical exposure with a combined 24% weight to industrials and communication services names. A combined 42.7% weight to Japanese and Switzerland is not surprising for an international low volatility strategy.
&ldquo;So, if you&#39;re looking at the individual holdings in that fund, you may see some, like, very volatile mining companies that pop up every now and then,&rdquo; notes Morningsar. &ldquo;Again, that&#39;s more of a play on the correlations. The objective here is reducing the volatility of the overall portfolio.&rdquo;
<h3>What&#39;s Next</h3>
With volatility ticking higher and fears of recessions mounting around the world, particularly in Europe, a region that accounts for a significant percentage of the MSCI EAFE Index, investors that want to stay long stocks are likely to consider the low volatility factor.
Plus, EFAV is cheap at just 0.20% per year, or $20 on a $10,000 investment.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/08/14261948/add-some-excitement-to-your-consumer-staples-investing-with-this-etf">An Exciting Staples ETF</a>
<a href="https://www.benzinga.com/markets/cannabis/19/08/14261218/the-new-cannabis-etf-makes-some-additions">Cannabis ETF Makes Some Changes</a>

If You're Looking At International Stocks, Consider This ETF

Developed markets stocks, including those in the United States, are struggling this year, but the situation is worse for ex-U.S. fare. The MSCI EAFE Index, one of the most widely followed gauges of ex-U.S. developed markets equities, is lower by nearly 13 percent year-to-date.
If there&#39;s good news, it&#39;s that markets outside the U.S. remain attractively valued relative to major domestic benchmarks. Investors looking to nibble on some international fare may want to consider a low volatility strategy.
<h3>What Happened</h3>
Low volatility exchange traded funds aren&#39;t confined to U.S. equities. The strategy is applied across geographies with plenty of success as highlighted by a more than seven-year track record for the iShares Edge MSCI Min Vol EAFE ETF (CBOE: EFAV), which has $8.83 billion in assets under management.
EFAV is doing the job that low volatility ETFs are supposed to do when markets swoon: be less bad than traditional indexes. The iShares ETF is down just over 4 percent year-to-date, significantly less bad than the MSCI EAFE Index.
&ldquo;The fund tracks the MSCI EAFE Minimum Volatility Index. Its construction process starts with all stocks in the MSCI EAFE Index, and it uses an optimizer to select and weight stocks in a way that minimizes the portfolio&#39;s expected volatility while honoring several constraints,&rdquo; <a href="https://www.morningstar.com/articles/901896/a-lowrisk-foreign-developedmarkets-fund.html">said Morningstar</a>.
<h3>Why It&#39;s Important</h3>
In addition to accomplishing the goal of performing less poorly when markets decline, EFAV does live up to its low volatility billing. The fund has a <a href="https://www.ishares.com/us/products/239626/?referrer=tickerSearch">three-year standard deviation</a> of 8.74 percent compared to 11.12 percent on the MSCI EAFE Index. EFAV&#39;s weighting methodology features some individual security and sector-level constraints.
&ldquo;It has had a persistent overweighting in firms from traditionally stable sectors like consumer staples and utilities, while underweighting those from more volatile sectors like technology and energy,&rdquo; said Morningstar.
EFAV allocates 24.44 percent of its weight to the consumer staples and utilities sectors while energy and technology names combine for just 4.54 percent of the fund&#39;s weight.
<h3>What&#39;s Next</h3>
Past performance is never a guarantee of future returns, but EFAV&#39;s track record does bode well for the fund, particularly if volatility remains high.
&ldquo;The fund&#39;s approach has successfully achieved its goal of reducing risk. From its launch in October 2011 through June 2018, its volatility was 23% lower than the MSCI EAFE Index, allowing its risk-adjusted returns to easily beat this same bogy,&rdquo; according to Morningstar.
The research firm has a Silver rating on EFAV.
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The low volatility factor is a favorite among investors and that theme extends beyond U.S. equities. Investors can use exchange traded funds to harness the low volatility factor while tapping ex-US developed markets stocks, a strategy that has worked well in 2017.
For example, the iShares Edge MSCI Min Vol EAFE ETF (CBOE:EFAV) is up 20 percent year-to-date. The $7.8 billion EFAV tracks the MSCI EAFE Minimum Volatility (USD) Index, the low volatility offshoot of the widely followed MSCI Index.
EFAV&#39;s underlying index &ldquo;aims to reflect the performance characteristics of a minimum variance strategy applied to the large and mid cap equity universe across Developed Markets countries around the world excluding the US and Canada,&rdquo; <a href="https://www.msci.com/documents/10199/a9f61654-5946-4f72-8aa1-6692996f17a2">according to MSCI</a>. &ldquo;The index is calculated by optimizing the MSCI EAFE Index, its parent index, in USD for the lowest absolute risk (within a given set of constraints). Historically, the index has shown lower beta and volatility characteristics relative to the MSCI EAFE Index.&rdquo;
<h3>
	Additional Details</h3>
Relative to traditional, cap-weighted ex-US developed markets strategies, EFAV&#39;s roster is small with just under 240 stocks. Still, the ETF has an equity beta of just 0.43 and a three-year standard deviation of about 9.78 percent, <a href="https://www.ishares.com/us/products/239626/?referrer=tickerSearch">according to issuer data</a>.
&ldquo;The fund attempts to create the least-volatile portfolio possible with large- and mid-cap stocks listed in developed markets in Europe, Australia, and Asia under a set of constraints,&rdquo; said Morningstar <a href="http://beta.morningstar.com/articles/837746/this-foreign-largecap-fund-should-provide-a-smooth.html">in a note</a> out last week. &ldquo;These include limiting sector and country tilts relative to the MSCI EAFE Index, which improves diversification. This strategy doesn&#39;t just target the least-volatile stocks. It also takes into account each stock&#39;s exposure to common risk factors and how they interact with each other to affect the portfolio&#39;s overall volatility.&rdquo;
None of EFAV&#39;s 239 holdings account for more than 1.5 percent of the ETF&#39;s weight. EFAV&#39;s top 10 holdings combine for just 14 percent of the fund&#39;s weight.
<h3>
	Solid Track Record</h3>
EFAV debuted in the fourth quarter of 2011 so it doesn&#39;t have the 10-year track record many investors crave when it comes to ETFs and mutual funds, but age hasn&#39;t affected EFAV&#39;s performance.
&ldquo;So far, the fund&#39;s approach has worked well. From November 2011 through August 2017, it exhibited 22% less volatility than its parent index,&rdquo; according to Morningstar. &ldquo;And it outpaced the benchmark by 1.6 percentage points annualized during that time. This was primarily thanks to more-favorable stock exposure within several sectors rather than differences in sector weightings.&rdquo;
EFAV allocates about 43 percent of its combined geographic to Japan and the UK and another 21.6 percent to Switzerland and Hong Kong.
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International Investing The Low Vol Way

Global shares skidded lately on confusion over the passing of the tax reform in the United States, rising worries over prime minister <a href="https://finance.yahoo.com/news/asia-shares-down-caution-over-us-tax-reform-010543575--finance.html">Theresa May&#39;s leadership</a> and upheaval in the Middle East.
Signs of receding popularity of President Donald Trump flared up the possibility of a delayed tax reform last week. <a href="http://edition.cnn.com/2017/11/07/politics/2017-us-election-highlights/index.html">Democrats emerged winners</a> in Virginia and New Jersey &ndash; a key move before the 2018 midterms. This win was viewed as an increased pressure on Republicans to pass the promised tax reforms.
The Washington Post, citing anonymous sources, reported last week that Senate Republican leaders are mulling over a one-year delay in the enactment of the corporate tax cut to conform to Senate rules, as per <a href="http://www.thehindubusinessline.com/markets/forex/dollar-slips-broadly-on-report-of-possible-delays-in-us-corporate-tax/article9947736.ece">a source</a> (read: <a href="https://www.zacks.com/stock/news/282431/treasury-etfs-in-focus-on-potential-delay-in-tax-reform">Treasury ETFs in Focus on Potential Delay in Tax Reform</a>).
However, the Senate finally <a href="https://www.marketwatch.com/story/treasury-yields-jump-as-senate-passes-budget-bill-juices-risk-appetite-2017-10-20">passed a budget resolution</a> that gives way to tax cuts. This pushed up the benchmark U.S. Treasury yield to 2.40% on Nov 10 from 2.33% from a day before. Plus, higher chances of a rate hike by the Fed in December contributed to the spike in yields. So, even if tax cuts are enacted soon, rising rate worries, which can cause disturbances in the market, will not leave investors.
Leadership issues are rising even across the pond. There is rising doubt over United Kingdom&#39;s prime minister Theresa May&#39;s ability to push through her Brexit legislation &quot;<a href="http://www.independent.co.uk/news/uk/politics/theresa-may-brexit-eu-boris-johnson-letter-40-mps-michael-gove-a8051066.html">amid a growing threat to her leadership</a> and concerns over whether she still has the political clout to govern.&quot; Labour and other opposition parties indicated that Theresa May doesn&#39;t possess adequate authority over the Conservatives to ensure the bill&#39;s passage.
In the Middle East, tensions between <a href="https://www.pri.org/stories/2017-11-12/cold-war-between-iran-and-saudi-arabia-heating-here-are-5-things-you-should-know">Iran and Saudi</a> Arabia are rising as a missile was fired toward Riyadh lately. Plus, Saudi Arabian crown prince looked to solidify his power by ordering a crackdown with arrests of royals, ministers and investors as part of an apparent drive to end corruption (read: <a href="https://www.zacks.com/stock/news/282069/etfs-in-focus-on-increased-tensions-in-saudi-arabia">ETFs in Focus on Increased Tensions in Saudi Arabia</a>).
Overall, world ETF iShares MSCI ACWI ETF ACWI lost about 0.6% in the last five days (as of Nov 10, 2017).
ETFs to Play
Against such a baffling backdrop, seeking refuges in low volatility products rather than sticking to highly risky options can help investors endure a sudden downslide in the market. These global low-volatility products could be intriguing for those who want to stay invested in equities, but like the idea of focusing on minimum volatility.
Low volatility ETFs generally tend to offer positive risk-adjusted gains, though not enormous (read<a href="https://www.zacks.com/stock/news/273779/low-volatility-etfs-to-buy-if-north-korea-tensions-flare-up">: Low Volatility ETFs to Buy If North Korea Tensions Flare Up</a>).
iShares Edge MSCI Min Vol Global ETF ACWV
This product offers exposure to global stocks that have lower volatility characteristics relative to the broader developed and emerging equity markets. American firms make up about 55% of the fund while Japan (12.9%), China (5.5%) and Switzerland (4.9%) round out the top four positions.
iShares Edge MSCI Min Vol EAFE ETF EFAV
EFAV looks to replicate the performance of international equity securities that have lower absolute volatility. Country wise, the fund appears more focused on Japan (28.7%), United Kingdom (14.1%) and Switzerland (13.2%) equities.
iShares Edge MSCI Min Vol Europe ETF EUMV
It gives exposure to European developed market equities with lower volatility characteristics relative to the broader European developed equity markets. In term of country exposure, United Kingdom takes the largest share at 25%, followed by Switzerland (18%), France (11.8%) and Germany (10.7%). &nbsp;&nbsp;&nbsp;&nbsp;
Legg Mason Low Volatility High Dividend ETF LVHD 
This fund is composed of U.S. equities with a relatively high yield and low price and earnings volatility. The fund yields about 3.30% annually.
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Emerging Markets

Emerging Market ETFs

Futures

Markets

ACWI

ACWV

EUMV

LVHD

Time To Buy Global Low Volatility ETFs?

Shares of Msci Inc (NYSE: <a class="ticker" href="/stock/msci#NYSE">MSCI</a>), one of the largest providers of indexes for use with exchange traded funds, are up an impressive 17.6 percent year-to-date, a move aided by a jaw-dropping 12 percent surge over the past week.
MSCI&#39;s relationships with various ETF providers are paying dividends. At the end of January, equity ETFs tracking MSCI indexes had a combined $511 billion in assets under management, good for year-over-year growth of 28 percent, according to the <a href="http://finance.yahoo.com/news/assets-equity-etfs-linked-msci-124500111.html">New York-based index provider</a>.
<h3>Looking Globally</h3>
On a global basis, there are now more than 900 ETFs tracking MSCI indexes, meaning MSCI provides indexes to more equity ETFs than any other index shop.
Emerging markets equities remain fertile ground for MSCI indexes, thanks in large part to ETFs such as the iShares MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>), iShares Core MSCI Emerging Markets ETF and scores of single-country ETFs. EEM is the second-largest emerging markets ETF in the U.S. and IEMG is a <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/01/8861490/a-banner-year-of-asset-growth-for-ishares-etfs">fast-growing, cost-efficient alternative </a>to the institutionally popular EEM.
<h3>Smart Beta And Asset Influx</h3>
The influx of assets to smart beta, or fundamentally-weighted ETFs is also benefiting MSCI.
&ldquo;Overall, assets in ETFs linked to MSCI&rsquo;s factor indexes reached $53 billion globally, as of January 27, 2017. ETF assets linked to MSCI indexes are one component of the more than $10 trillion in assets under management benchmarked to MSCI&rsquo;s indexes worldwide,&rdquo; said MSCI.
Popular smart beta ETFs tracking MSCI benchmarks include the $12 billion iShares Edge MSCI Min Vol USA ETF (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>) and the $5.9 billion iShares Edge MSCI Min Vol EAFE ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>).
<h3>Recent Performance</h3>
As of Jan. 27, assets in equity ETFs tracking MSCI indexes climbed nearly $30 billion, $12 billion of which was new inflows and $17 billion of which was attributable to market appreciation, according to the index provider.
In addition to BlackRock Inc.&#39;s (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>) iShares unit, the world&#39;s largest ETF issuer, providers using MSCI indexes for ETFs include State Street, Fidelity, Deutsche Asset Management, Amundi, Lyxor and Liffe, among others.

Sector ETFs

Broad U.S. Equity ETFs

Intraday Update

IEMG

MSCI

USMV

ETFs Are Big Business For Index Providers

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.

Movers

EEMV

MTUM

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.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/10/8575799/another-etf-avenue-for-fighting-inflation">Another ETF Avenue For Fighting Inflation</a></bzrelatedlink>
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)).
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JPMV

Happy Anniversary To These ETFs

Low volatility exchange-traded funds are garnering plenty of attention this year, but investors should note the advantages of the low volatility factor are not confined to U.S. borders. That reminder is particularly important post-Brexit, as some investors are looking to maintain ex-U.S. developed markets exposure while mitigating risk.
The iShares Edge MSCI Min Vol EAFE ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>), the EAFE answer to the popular iShares Edge MSCI Min Vol USA ETF (iShares Trust (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)), is an ideal way for investors to main exposure to developed world equities while tempering portfolio risk and volatility.
<h3>Looking Beyond The United States</h3>
Nearly half of the world&#39;s combined equity market capitalization is found outside the United States, but U.S. investors often associate international investments, even developed markets fare, as being more volatile than domestic equivalents. Combine the home country bias with perceptions about volatility, and there is a logical explanation for why most U.S. investors heavily tilt their portfolios to U.S. investments.
<bzrelatedink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/8046474/low-volatility-works-with-ex-u-s-developed-markets-too">Low Volatility Works With Ex-U.S. Developed Markets, Too</a></bzrelatedink>
EFAV addresses those concerns as well. EFAV has a three-year standard deviation of 9.6 percent, compared to 13.3 percent on the widely followed MSCI EAFE Index. The advantages of EFAV and other low volatility were on display immediately following the Brexit outcome.
&ldquo;Brexit certainly put minimum volatility strategies to the test. But they did what they were designed to do &mdash; reduced risk, in accordance to data from Bloomberg. However, minimum volatility funds are intended as long-term investments, so the more important question is this: What was their downside versus broad indexes over longer periods? Here too, minimum volatility strategies lost less than the relative broad market,&rdquo; said BlackRock <a href="https://www.blackrockblog.com/2016/07/11/min-vol-post-brexit/">in a recent note</a>.
<h3>Before Brexit</h3>
Over the past three years, EFAV has outpaced the EAFE MSCI Index by an almost seven to one margin, while being 410 basis points less volatile than the traditional EAFE benchmark.
While U.S. low volatility ETFs are also getting plenty of attention for their 2016 asset-gathering acumen, EFAV deserves some of that adulation as well. EFAV has hauled in more than $3 billion in new assets this year, or nearly five times more than the iShares MSCI EAFE Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>).
&ldquo;Historically, minimum volatility strategies have declined less than the broad indexes during market downtowns, but they also have risen less during rallies. In other words, these funds have captured (considerably) less downside and participated in most of the upside. Given that, some are tempted to just hold minimum volatility funds during times of greater market volatility,&rdquo; according to Blackrock.
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How To Keep Developed Markets Exposure, Avoid Volatility

The low volatility phenomenon is enthralling investors this year, and inflows to U.S.-focused low volatility exchange-traded funds confirm as much. However, the low volatility factor&#39;s utility is not confined to U.S. borders.
Nearly half of the world&#39;s combined equity market capitalization is found outside the United States, but U.S. investors often associate international investments, even developed markets fare, as being more volatile than domestic equivalents. Combine the home country bias with perceptions about volatility and there is a logical explanation for why most U.S. investors heavily tilt their portfolios to U.S. investments.
<h3>International ETFs And Low Volatility</h3>
This year, investors are warming to the advantages of low volatility international ETFs, including the iShares Edge MSCI Min Vol EAFE ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>). As its name implies, EFAV is the low volatility alternative to the iShares MSCI EAFE Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>). Flows data confirm investors are clearly preferring the <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/01/6122351/international-etf-ideas-for-conservative-investors">low volatility solution</a> this year.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/8010912/how-a-low-volatility-etf-works-is-as-important-as-why">How A Low Volatility ETF Works Is As Important As Why</a></bzrelatedlink>
EFA has not lost any assets this year, but has not added any either. Conversely, investors have poured nearly $2.5 billion of new money into EFAV. That data point shows investors are getting it right. EFAV is up 3.7 percent year-to-date, while EFA is down 0.1 percent. EFAV is also doing its job, as its year-to-date volatility has been 520 basis points below that of EFA.
<h3>It's More Than Just Low Volatility</h3>
EFAV &ldquo;doesn&#39;t just target the least-volatile stocks. It takes into account each stock&#39;s exposure to common risk factors and the co-variances among them to better estimate how the holdings will contribute to the portfolio&#39;s overall volatility. This may be a suitable core holding for conservative stock investors,&rdquo; according to <a href="http://news.morningstar.com/articlenet/article.aspx?id=755342">Morningstar</a>.
A combined 62.7 percent of EFAV&#39;s weight, in order, is allocated to Japan, the UK and Switzerland. By comparison, the traditional MSCI EAFE Index allocates half of its combined weight to those countries. EFAV&#39;s weight to Japan is more than 600 basis points above EFA&#39;s, contributing to a lower dividend yield on the former, but that also means EFAV investors have more exposure to <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/05/7984167/this-etf-could-lead-a-japan-rebound">Japanese dividend growth</a>.
<h3>Looking Down The Road</h3>
As is the case with U.S.-focused low volatility strategies, data suggest that over the long haul, EFAV can be a winner.
&ldquo;From its back-filled inception at the end of May 1988 through April 2016, the MSCI EAFE Minimum Volatility Index outpaced the MSCI EAFE Index, with 78 percent of the volatility. This is consistent with independent studies, which have shown that low-volatility stocks have tended to offer better risk-adjusted returns than the market. Part of this attractive performance profile is due to low-volatility strategies&#39; tilt toward stocks with low valuations and high profitability, two characteristics that have historically been associated with better returns,&rdquo; added Morningstar.

Eurozone

Low Volatility Works With Ex-U.S. Developed Markets, Too

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

HEFV

International ETF Ideas For Conservative Investors

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>

New ETFs

Forex

IEUS

iShares Makes A Big Currency Hedged, Low Volatility Splash

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.
<div id="file-preview">
		<a href="https://www.benzinga.com/imce?app=nomatter%7Cimceload@imceInline.load#" onclick="imce.send('spy_usmv.png'); return false;" title="Insert file"><img alt="spy_usmv.png" height="284" src="https://www.benzinga.com/files/u79448/spy_usmv.png" width="460" /></a></div>

		&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

Minimum volatility ETFs have gained a great deal of notoriety in the last several years for their conservative approach to selecting stocks with lower price fluctuations than their peers. 

	Investors that are concerned about the recent unpredictability in the stock market may want to consider these vehicles for steady capital appreciation in light of intensified turmoil in high beta sectors.

	Because of their defensive posture and focus on stable companies, many of these low volatility ETFs are breaking out to new highs this week and continuing to show strong relative momentum. 

	The first ETF to introduce this concept back in 2011 is the PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>). This ETF is made up of 100 stocks from the S&amp;P 500 Index with the lowest realized volatility over the last 12 months. The fund is then rebalanced quarterly and equally weighted to ensure that the constituents conform to the index specifications.
Related: <a href="http://www.benzinga.com/etfs/broad-u-s-equity-etfs/14/05/4535307/3-small-cap-etfs-with-better-performance-than-iwm">3 Small-Cap ETFs With Better Performance Than IWM</a>
<div id="preview-wrapper">
	<div id="file-preview">
		<a href="https://www.benzinga.com/imce?app=nomatter%7Cimceload@imceInline.load#"><img alt="splv.png" height="284" src="https://www.benzinga.com/files/u79448/splv.png" width="460" /></a></div>
</div>

	Not surprisingly, the largest sector allocations in SPLV are utilities and consumer staples, which are known for their stalwart dividends and steady business models. As a result, SPLV has a healthy dividend yield of 2.47 percent, and distributions are paid monthly to shareholders.

	So far this year, SPLV has gained 3.98 percent, which is more than double the 1.45 percent return of the SPDR S&amp;P 500 ETF (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>). In addition, this fund just recently hit a new all-time high.

	Investors that are looking for an international low volatility portfolio may want to consider the iShares MSCI EAFE Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>). This ETF gives you exposure to approximately 190 stocks in Europe, Australia, Asia and the Far East and uses similar volatility screening characteristics as SPLV.

	The largest sector weightings in EFAV favor financials and consumer staple stocks.  In addition, the principal country weightings are split between the United Kingdom and Japan.

	Year-to-date, EFAV has gained 4.98 percent and may benefit from <a href="http://www.benzinga.com/etfs/14/05/4522697/europe-etfs-show-convincing-strength">additional strength</a> in developed European economies if the recovery continues as planned.

	Another similar low volatility strategy that includes both domestic and international stocks is the iShares MSCI Global Minimum Volatility ETF (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>).

	Conservative investors who do decide to implement a low volatility equity strategy in their portfolio should be aware that these ETFs may underperform during periods when high growth sectors are flying. That being said, they still provide diversified exposure to high quality companies in a single investment vehicle.

PowerShares S&P 500 Low Volatility Portfolio

SPLV

Minimum Volatility ETFs Hit All-Time Highs

By any standard the, iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>) is big. With almost $41.8 billion in assets under management, the ETF is one of the biggest ETFs by that metric of any stripe. EFA is also heavily traded with average daily volume north of 17.4 million shares over the last three months.

More important than those superficial metrics is the potential EFA is showing to make a big move to the upside. This according to noted technical analyst Chris Kimble of <a href="http://blog.kimblechartingsolutions.com/">Kimble Charting Solutions</a>.

Kimble points out that EFA is facing horizontal resistance around the $59.15 area as well as diagonal resistance brought on by downtrend line going back to the ETF's <a href="http://blog.kimblechartingsolutions.com/wp-content/uploads/2013/03/efahsheadinsandmar71.jpg">2007 high</a>. The right shoulder of a head and shoulders pattern may also be forming in EFA as well, according to Kimble.

The head and shoulders pattern is usually viewed by technical analysts as a bullish reversal pattern, often spotted when a security is in an uptrend. EFA fits the bill. The ETF is just pennies below its 52-week high and has gained almost seven percent in the past three months.

"The global community would benefit if EFA can break from this pattern," said Kimble.

That statement could prove to be accurate because EFA's heft gives it marquee status among ETFs focusing on non-U.S. developed market equities. The Vanguard MSCI EAFE ETF (NYSE: <a class="ticker" href="/stock/vea#NYSE">VEA</a>), Vanguard's answer to EFA, is displaying similar bullish traits and is also up about seven percent in the past 90 days. 

Investors should note what countries are the primary drivers of EFA's price action. While the fund is light on the most volatile Eurozone members such as Spain and Italy (those two represent barely over fiver percent of EFA's weight), the U.K. and Japan combine for almost 42 percent of the ETF's weight. No other countries garner double-digit allocations within EFA, but Australia and Switzerland each account for more than nine percent of the ETF's weight.

Investors looking for lower volatility alternatives to EFA can consider the iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>). EFAV, which has almost $416 million in AUM, has a weight to financial services stocks that is about 600 basis points less than EFA's while featuring an allocation to staples stocks that is about 500 points higher. EFAV is up 5.5 percent in the past 90 days.

Another alternative to consider is the PowerShares S&amp;P International Developed Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/idlv#NYSE">IDLV</a>), which tracks the S&amp;P BMI International Developed Low Volatility Index. IDLV is Japan-heavy as that country accounts for nearly 39 percent of the ETF's weight. Canada and the U.K. combine for another 32 percent. 

IDLV has a 30-day SEC yield of 4.37 percent and a price-to-book ratio of 1.55, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=IDLV">according to PowerShares data</a>. EFA has a 30-day SEC yield of 3.61 percent and a price-to-book ratio of 2.62.

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Short Ideas

Technicals

Global

IDLV

Big ETF Could be Headed for Big Breakout

There is no denying that low volatility ETFs are becoming increasingly popular with investors. Just look at what this sub-sector of the ETF universe has been able to accomplish in less than years. 

The king of the group is the PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>), which has raked in almost $3.5 billion in assets. SPLV will not turn two years old until May.

On Wednesday, iShares announced its four-ETF suite of low volatility funds <a href="http://www.benzinga.com/news/13/02/3372887/ishares-low-vol-etfs-top-4b-in-aum">has topped a combined $4 billion in assets under management</a>. That quartet of ETFs debuted in October 2011. The trend of robust inflows to low or minimum volatility ETFs is not just continuing. It is surging. 

"This year through February 19, as the chart shows, min vol funds have attracted average monthly flows of close to $900 million. That is more than double the average monthly flows we saw in 2012 and far above 2011's average monthly flows of less than $100 million," <a href="http://isharesblog.com/blog/2013/02/28/using-min-vol-etfs-to-access-stocks/">according to a note by Dodd Kittsley</a>, global head of ETP research at BlackRock (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>).

As is often the case with various corners of the ETF space, some "low vol" funds are gaining brand-name recognition, such as SPLV, while some still undiscovered. However, there are a few that fit into the latter category that investors should have a look at. 

PowerShares S&amp;P 500 High Dividend Portfolio (NYSE: <a class="ticker" href="/stock/sphd#NYSE">SPHD</a>)
Obviously, SPHD's name indicates this is a dividend ETF, which it is and it is arguably one of the <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/02/3346880/under-the-hood-a-new-dividend-etf-diva">more compelling new income funds on the market</a>.

However, SPHD's underlying index tells investors this is low volatility play as well. The fund tracks the S&amp;P 500 Low Volatility High Dividend Index, which tracks the 50 S&amp;P 500 components with historically high dividend yields and low volatility. That combination could be alluring for investors that are looking for more in the way yield.

For example, SPHD has a 30-day SEC of over four percent. That easily exceeds that of many popular dividend ETFs that do not screen for low volatility names. Like SPLV, SPHD pays a monthly dividend and features large weights to utilities (over 23 percent) and consumer staples (over 13 percent). SPHD is up 7.7 percent year-to-date, outpacing the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) by about 40 basis points in the process.

iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>)
The iShares MSCI EAFE Minimum Volatility Index Fund is the low volatility answer to the wildly popular ishares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>), one of the largest ETFs of any stripe. EFAV is not nearly as big as EFA, though with $287.6 million in AUM the latter is by no means small. 

EFAV is cheaper than EFA with a an expense ratio of 0.2 percent compared to 0.34 percent for EFA, but the lower expenses come with some cost to investors as EFA has been the better performer since EFAV debuted in October.

Indicating that market environment plays an importance part in the returns accrued by low volatility ETFs, EFAV has sharply outpaced EFA this year as Eurozone fears have once again risen. EFAV's sector weights give away the reasons for its out-performance of EFA this year.

EFAV's weight to financials is 570 basis points less than EFA's, but the former's weight to consumer staples and health care names are each more than 500 basis points greater than the latter's.

PowerShares S&amp;P International Developed Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/idlv#NYSE">IDLV</a>)
For the moment, the PowerShares S&amp;P International Developed Low Volatility Portfolio is one of those ETFs that fans of superficial metrics such as assets and volume love to hate. IDLV has just under $35 million in AUM and average daily volume of less than 16,900 shares. 

IDLV features at least one surprise, that being a 25.8 percent weight to financial services stocks, a fairly large allocation to that sector among low volatility ETFs. Consumer staples follow with a weight of 21.8 percent. On the other hand, IDLV does temper volatility by featuring scant Eurozone exposure. For example, Germany and the Netherlands combine for less than 2.7 percent of the ETF's weight.

At the country level, there are two other issues to consider with IDLV. First is a 38.5 percent weight to Japan. As that exposure is unhedged, IDLV could be somewhat vulnerable if the yen bounces back. Second, the ETF has an 11.7 percent weight to the U.K., which recently lost its AAA credit rating.

The good news is IDLV is up 4.3 percent year-to-date and has a 30-day SEC yield of 4.42 percent, <a href="http://www.invescopowershares.com/products/overview.aspx?ticker=IDLV#freqdist">according to PowerShares data.

For more on ETFs, click </a><a href="http://www.benzinga.com/etfs">here</a>.

SPHD

More Low Vol ETFs Your Broker Forgot to Mention

BlackRock's (NYSE: <a class="ticker" href="/stock/blk#NYSE">BLK</a>) iShares unit, the world's largest ETF issuer, said today its suite of four minimum volatility funds has crossed a combined $4 billion in assets under management.

The iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>) and the iShares MSCI USA Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>), with over $1.4 billion and $1.6 billion in AUM, respectively, have lead the way for the iShares low volatility lineup. 

Since January, EEMV and USMV have both topped the $1 billion in assets mark, attracting $553.9 million and $787.8 million in new flows, respectively. The two ETFs are the sixth and seventh U.S. ETFs launched in the last two years to reach $1 billion in net assets, according to iShares.

As <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/11/3076528/low-vol-em-etf-continues-to-impress-with-aum-gains">was previously noted with EEMV</a>, which has been one of the top-performing diversified emerging markets ETFs since its debut, it was merely a matter of "when" not "if" the fund crossed the $1 billion in AUM threshold.

"In an environment in which macro uncertainty continues to lead to financial market volatility, investors are complimenting their portfolios with iShares Minimum Volatility suite of products," said Daniel Gamba, head of iShares Americas Institutional Business at BlackRock, in the statement. "Clients are attracted to iShares Minimum Volatility products for the risk-reward trade-offs and ease of implementations these ETFs offer. Investors also recognize there is significant evidence that Minimum Volatility funds improve risk-adjusted returns, while also cushioning portfolios during periods of heightened turbulence."

The iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>), the low volatility answer to the popular iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>), has over $287.2 million in assets while the iShares MSCI All Country World Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>) has $768 million in AUM.

For more on low volatility ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/11/3076528/low-vol-em-etf-continues-to-impress-with-aum-gains">here</a>.

iShares "Low Vol" ETFs Top $4B in AUM

One of the most popular ETFs launched in the past couple years is PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>), and it's not hard to guess why.

After suffering through the dot-com crash and 2008 financial crisis, investors are putting a premium on safety, particularly when dipping their toes into stocks.

In the last five years, investors have pulled $548 billion from U.S. equity mutual funds and plowed more than $1 trillion into taxable fixed-income funds, according to ConverEx Group. However, equity-based ETFs have gathered $330 billion of inflows during the same period.

Recently, a decent chunk of these ETF flows has been earmarked to “safer” funds that employ low-volatility and dividend strategies with indexes.

For example, SPLV has quickly grown to over $3 billion in assets after launching in May 2011. The fund is one of the biggest success stories in ETFs the past few years, and investors can expect more low-volatility funds to hit the market in 2013.

The ETF's tracking index is comprised of the 100 stocks from the S&amp;P 500 with the lowest realized volatility the past year. Volatility is a measure of a security's tendency to jump around in price.

SPLV has been popular because the strategy is relatively easy to explain and understand, and investors want some downside protection when venturing into stocks.

The fund turned in a respectable 2012 with a 10.1% total return but it did trail the S&amp;P 500, which gained 16%, according to Morningstar. “Naturally, with a low-volatility bent, the fund emphasizes defensive sectors such as utilities and consumer staples,” the investment researcher says in a profile of SPLV.

The fund's underperformance relative to the S&amp;P 500 can be attributed partly to the overweight in these two sectors. Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) rose just 1 percent last year, while Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>) added 10.7 percent.

SPLV has 31 percent in the utilities sector and 26.8 percent in consumer staples, according to manager Invesco PowerShares.

Low-volatility strategies have historically earned “excellent risk-adjusted returns” but can “perform miserably during furious bear markets,” Morningstar notes.

Now, Invesco PowerShares is readying a pair of funds in an attempt to capitalize on the success of SPLV. According to a recent filing, the firm wants to launch PowerShares S&amp;P 400 Low Volatility Portfolio and PowerShares S&amp;P 600 Low Volatility Portfolio, which would track the mid-cap and small-cap portions of the U.S. stock market, respectively.

Other existing ETFs on the market designed to track low-volatility benchmarks include:

<ul><li>iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)</li>
<li>iShares MSCI All Country World Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>)</li> 
<li>iShares MSCI USA Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)</li>
<li>PowerShares S&amp;P International Developed Low Volatility (NYSE: <a class="ticker" href="/stock/idlv#NYSE">IDLV</a>)</li> 
<li>PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>)</li> 
<li>iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>)</li>
<li>EGShares Low Volatility Emerging Markets Dividend ETF (NYSE: <a class="ticker" href="/stock/hilo#NYSE">HILO</a>)</li></ul>

EELV

HILO

Low-Volatility ETFs Ready for Next Act

There is no denying the allure of finding the next Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>), Amazon (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>) or Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>) is intense. There is also no denying that many investors view stocks such as General Mills (NYSE: <a class="ticker" href="/stock/gis#NYSE">GIS</a>), PepsiCo (NYSE: <a class="ticker" href="/stock/pep#NYSE">PEP</a>) and Procter &amp; Gamble (NYSE: <a class="ticker" href="/stock/pg#NYSE">PG</a>) as boring.

Stodgy stocks that are significantly less volatile than many growth names can boast at least one important factor: High returns. From 1990 through 2011, <a href="http://shortroadtoretirement.com/2012/05/volatility-stocks-outperform-high-volatility-stocks.html">the market's least risky stocks outperformed the more volatile counterparts</a> by noteworthy margins.

That is not to say General Mills outperformed Apple, but the performance of so-called boring stocks relative to more exciting issues underscores <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2805967/the-definitive-guide-to-low-volatility-etfs">the rising popularity of low volatility ETFs</a>. And since low volatility stocks are outpacing racier rivals, it is not surprising to learn that some "low vol" ETFs are outperforming traditional equivalents. 

Here are some interesting examples:

PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>)
The PowerShares S&amp;P 500 Low Volatility Portfolio undoubtedly the big kahuna of the low volatility ETF world and it should be noted that year-to-date, SPLV has lagged the S&amp;P 500. However, over the past year, SPLV has a fair lead on the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>).

Outperforming SPY is not the only feather in SPLV's cap. Over the past year, the ETF has outpaced the Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>) and the Utilities Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>). Utilities and staples names represent over 60 percent of XLP's weight.

iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)
Just as SPLV is the dominant low volatility focused on U.S. equities, the iShares MSCI Emerging Markets Minimum Volatility Index Fund has carved out similar niche for itself in the emerging markets world. Year-to-date, EEMV has topped the iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>) by nearly 600 basis points and the Vanguard MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) by more than 400 basis points. 

With an expense ratio of 0.25 percent, EEMV is far cheaper than EEM and only moderately pricier than VWO.

iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>)
The iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>) has over $34.6 billion in AUM, making it one of the 10-largest U.S. ETFs by assets. By comparison, EFAV, the low volatility equivalent is small with $73 million in AUM. This is another case of <a href="http://www.benzinga.com/news/12/05/2549131/4-ignored-etfs-up-more-than-20-ytd-gerj-vrom-tao">size not being indicative of superior returns</a> with ETFs. 

Not only have investors been treated to superior returns with EFAV this year, the 10-month old ETF has an annual expense ratio of 0.2 percent compared to 0.34 percent for EFA.

iShares MSCI All Country World Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>)
The iShares MSCI All Country World Minimum Volatility Index Fund shows some noticeable differences when compared to its traditional counterpart, the iShares MSCI All Country World Minimum Index Fund (NASDAQ: <a class="ticker" href="/stock/acwi#NASDAQ">ACWI</a>).

First, ACWI is six times larger by assets than ACWV. The former is also slightly cheaper than the latter. ACWI has an expense ratio of 0.34 percent while ACWI charges 0.35 percent. However, ACWV is able to trump that slight difference in fees by topping ACWI by about 80 basis points year-to-date.

For more on low volatility ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2805967/the-definitive-guide-to-low-volatility-etfs">here</a>.

AAPL

AMZN

GOOG

Low Volatility ETFs Topping Traditional Counterparts

Until 2011, investors seeking refuge from topsy-turvy markets were forced to turn to known entities. Those being cash, high-grade government and corporate bonds and sectors such as consumer staples and utilities. 

These days, there are more low volatility choices than for investors to embrace and these new "low vol" plays come courtesy of the ETF world. Simply put, the number of ETFs advertised as low volatility funds <a href="http://www.benzinga.com/trading-ideas/long-ideas/11/11/2113151/wild-market-are-minimum-volatility-etfs-proving-their-worth">has exploded since last year</a>. 

As a group, low volatility ETFs have had mixed success in terms of attracting assets under management. Some have thrived (one even topping the $2 billion AUM mark) while others <a href="http://www.benzinga.com/trading-ideas/long-ideas/11/10/2001773/four-low-volatility-etfs-your-broker-forgot-to-mention">have toiled in anonymity</a>. 

Regardless of an ETF's popularity or obscurity, investors should do a little homework before running into any volatility fund. The Definitive Guide to Low Volatility ETFs is here to help.

PowerShares S&amp;P 500 Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/splv#NYSE">SPLV</a>)
The PowerShares S&amp;P 500 Low Volatility Portfolio is not that old (it debuted in May 2011), but the fund has quickly become the dominant name among low volatility ETFs. As of August 3, SPLV had almost $2.4 billion in assets under management. 

More important than size is the fact that SPLV is doing its job and that is providing investors with a credible alternative to a traditional S&amp;P 500 index ETF. In the past year, SPLV has outperformed the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) by 400 basis points. That type of performance differential mitigates the impact of SPLV's 0.25 percent expense ratio, which is by no means high, it is just high compared to funds like SPY.

SPLV is currently home to 98 stocks, though the fund can hold up to 100 stocks from the S&amp;P 500 Index with the lowest realized volatility over the past 12 months according to PowerShares. Not surprisingly, utilities and consumer staples combine for 60 percent of SPLV's sector weight.

PowerShares S&amp;P Emerging Markets Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/eelv#NYSE">EELV</a>)
PowerShares did not rest on its laurels with SPLV. In an effort to duplicate that success in the emerging markets universe, the fourth-largest U.S. ETF sponsor introduced the PowerShares S&amp;P Emerging Markets Low Volatility Portfolio in January.

EELV was not the first ETF to bring the low volatility/emerging markets combination to investors and that might explain why the fund has just $10.8 million in AUM. However, that small AUM total belies some important and positive facts about EELV. First, the fund is relatively inexpensive compared to other emerging markets ETFs with an expense ratio of just 0.29 percent. Second, EEMLV has gained 10.4 percent since its debut. That compares quite favorably with a gain of less than three percent for the iShares MSCI Emerging Markets Index Fund (NYSE: <a class="ticker" href="/stock/eem#NYSE">EEM</a>).

Malaysia and South Africa combine for over 47 percent of EELV's country weight. Taiwan is the only other nation to receive a double-digit allocation.

PowerShares S&amp;P International Developed Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/idlv#NYSE">IDLV</a>)
The PowerShares S&amp;P International Developed Low Volatility Portfolio also debuted in January and this fund has also struggled to attract assets. As of August 3, IDLV had just $8.1 million in AUM. However, as is the case with IDLV's emerging markets counterpart, EDLV, the AUM number belies IDLV's ability to generate alpha for investors.

Since its debut, IDLV has surged 9.2 percent and that is with a 43 percent allocation to beaten down Japanese equities. Arguably, IDLV's performance indicates the fund is a valid option for investors looking for exposure to Japan without committing to a Japan-specific fund. With an allocation of 16.4 percent, Canada is the only other country to receive a double-digit weight in IDLV. 

Other country weights include Singapore, New Zealand, the U.K. and Australia. IDLV also features a reasonable expense ratio of 0.25 percent.

EGShares Low Volatility Emerging Markets Dividend ETF (NYSE: <a class="ticker" href="/stock/hilo#NYSE">HILO</a>)
Maybe it is because HILO advertises itself as an emerging markets dividend play <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2408820/4-em-dividend-etfs-your-broker-forgot-to-mention-hilo-ediv-de">that fund leads a somewhat anonymous existence</a>. 

HILO's lack of popularity does not mean that it is not a fine ETF. The fund has been a solid performer this year and an index yield of almost 5.4 percent helps mute the impact of a pricy 0.85 percent expense ratio. "Additional risk criteria correlated to the MSCI Emerging Market Index limits concentration in any position to 5 percent and country exposure to a maximum of 5 positions," according to EGShares.

Brazil, South Africa, China and Malaysia are HILO's top country weights and the ETF pays homage to the typical low volatility sectors as telecom and utilities combine for almost 52 percent of the fund's weight.

iShares MSCI USA Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/usmv#NYSE">USMV</a>)
Given SPLV's success, it is only logical that the fund would attract a couple of competitors. One of those rivals is the <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2804052/beyond-splv-low-volatility-etfs-to-survive-a-wild-market">sometimes forgotten</a> iShares MSCI USA Minimum Volatility Index Fund.

USMV came to market in October 2011 and now has $374.4 million in AUM. The iShares offering also boasts a paltry 0.15 percent expense ratio and a year-to-date gain of 10.5 percent. Home to almost 120 stocks, USMV's sector weightings are a little different than other low volatility ETFs. Translation: USMV is not excessively weighted to staples and utilities names.

Healthcare, staples, technology and consumer discretionary all receive double-digit weights in USMV while utilities are merely the fund's sixth-largest sector weight with an allocation of 8.6 percent.

iShares MSCI All Country World Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/acwv#NYSE">ACWV</a>)
The iShares MSCI All Country World Minimum Volatility Index Fund, which shares the same inception date as USMV, has proven to be even more popular than its U.S.-focused counterpart. With a sizable roster of 264 stocks, USMV has raked an impressive $453.2 million in AUM, making it one of the more successful new ETFs of the past year. 

While ACWV paints itself as an all country play, the U.S. accounts for 53 percent of this fund's weight. With a concentration of nearly 13 percent, Japan is the only country to receive a double-digit weight. 

ACWV proves the low volatility theme works as the fund has outpaced the iShares MSCI ACWI Index Index Fund (NASDAQ: <a class="ticker" href="/stock/acwi#NASDAQ">ACWI</a>) by nearly 200 basis points this year. Staples, health care, financials and consumer discretionary are ACWV's top-four country weights. Utilities come in sixth with a weight of 8.7 percent.

iShares MSCI Emerging Markets Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/eemv#NYSE">EEMV</a>)
Just as SPLV is the king of low volatility ETFs with a domestic focus, EEMV can lay claim to being <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2391114/etf-showdown-low-beta-high-stakes-eelv-eemv-hilo">the king low volatility emerging markets funds</a>.

Not only has EEMV outpaced the rival EELV and HILO by significant margins this year, but this $298.7 million fund has also left the iShares MSCI Emerging Markets Index Fund and the Vanguard MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>) in its wake. What makes EEMV's year-to-date performance all the more impressive is that the fund allocates almost 25 percent of its weight to financials, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/08/2804289/etf-showdown-em-bank-battle">a volatile sector in developed and developing markets alike</a>.

Consumer staples and telecom names combine for another 26.5 percent of EEMV's weight. The fund's country weights are predictable in that Taiwan and South Korea, arguably the two most conservative emerging markets, are two of the fund's three largest country allocations. EEMV has an annual expense ratio of 0.25 percent.

iShares MSCI EAFE Minimum Volatility Index Fund (NYSE: <a class="ticker" href="/stock/efav#NYSE">EFAV</a>)
Just as EEMV is the "low vol" equivalent of one of the largest ETFs of any kind, in that case EEM, the iShares MSCI EAFE Minimum Volatility Index Fund has a traditional counterpart. The iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="/stock/efa#NYSE">EFA</a>) with $34.6 billion in AUM is also one of the 10 largest ETFs by assets on the market today.

By comparison, EFAV is small with just $73 million in AUM, but EFAV is 14 basis points cheaper than EFA. The former also keeps up a familiar trend: Low volatility funds outpacing their non-volatility counterparts in 2012. Year-to-date, EFAV has topped EFA by almost 240 basis points. 

The U.K. and Japan dominate EFAV's country lineup, combing for over 55 percent of the fund's weight. Five sectors – financials, staples, health care, industrials and telecom – receive double-digit weights in the fund.

Russell Dev ex-U.S. Low Volatility ETF (NYSE: <a class="ticker" href="/stock/xlvo#NYSE">XLVO</a>)
Just nine months old, the Russell Developed ex-U.S. Low Volatility ETF is worthy of a place in the low volatility ETF conversation. Minus fees and expenses, XLVO's 30-day SEC yield was a fair of 3.19 percent as of June 30, <a href="https://www.russelletfs.com/Products/XLVO_Overview.aspx">according to Russell data</a>.

XLVO is a bit more diverse at the country level than its developed world rivals on this list. Five countries – the U.K., Canada, Japan, Australia and Switzerland and receive double-digit weights. Be advised that XLVO does have some Eurozone exposure as Germany, France and the Netherlands combine for over 13 percent of XLVO's weight.

The $5.1 million ETF, which charges 0.25 percent per year, was home to 316 stocks as of July 31. XLVO's top-10 holdings represent just 20.1 percent of the fund's overall weight.

Russell 2000 Low Volatility ETF (NYSE: <a class="ticker" href="/stock/slvy#NYSE">SLVY</a>)
There are multiple low volatility ETFs devoted to large cap U.S. stocks, developed world ex-U.S. stocks and emerging markets equities. However, the Russell 2000 Low Volatility ETF is the lone low volatility ETF devoted exclusively to small-caps. SLVY's 171 constituents have an average market cap of $1.35 billion. 

While volatility and beta are not the same thing, it is worth noting SLVY's beta against the Russell 3000 is 1.2. SLVY has $10 million in AUM and an annual expense ratio of 0.3 percent. To its credit, SLVY has slightly outperformed the iShares Russell 2000 Index Fund (NYSE: <a class="ticker" href="/stock/iwm#NYSE">IWM</a>).

Russell 1000 Low Volatility ETF (NYSE: <a class="ticker" href="/stock/lvol#NYSE">LVOL</a>)
The Russell 1000 Low Volatility ETF is the largest of the Russell "low vol" lineup with almost $68.3 million in AUM. LVOL is typical of some of the other large-cap domestic funds highlighted here in that staples and utilities combine for over 38 percent of the fund's weight. Health care and producer durables also receive double-digit weights.

Home to 105 stocks, LVOL's top-10 holdings account for just 21.3 percent of the ETF's weight. That lineup includes familiar blue chips such as Dow components AT&amp;T (NYSE: <a class="ticker" href="/stock/t#NYSE">T</a>), Coca-Cola (NYSE: <a class="ticker" href="/stock/ko#NYSE">KO</a>), Kraft (NASDAQ: <a class="ticker" href="/stock/kft#NASDAQ">KFT</a>) and Verizon (NYSE: <a class="ticker" href="/stock/vz#NYSE">VZ</a>). LVOL charges just 0.2 percent per year and has a beta of 0.89 against the Russell 3000.