Happy Anniversary To These ETFs
Anniversaries for exchange-traded funds are not always worth celebrating, but with the iShares Edge MSCI Min Vol USA ETF (iShares Trust (NYSE: USMV)) and some of its iShares low volatility stablemates, this is an anniversary worth celebrating.
Half A Decade Of ETF Success For These 4
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's eighth-best asset-gathering ETF.
USMV's stablemates include the $4.4 billion iShares Edge MSCI Min Vol Emerging Markets ETF (iShares Inc. (NYSE: EEMV)), the $7.9 billion iShares Edge MSCI Min Vol EAFE ETF (NYSE: EFAV) and the $3.2 billion iShares Edge MSCI Min Vol Global ETF (iShares Inc. (NYSE: ACWV). Like USMV, ACWV, EEMV and EFAV debuted in October 2011.
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.
Some Fun Stats
EEMV'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'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 AltaVista Research: 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's lineup, which is the ETF's industry largest.
“All of the iShares Min Vol ETFs celebrating their five year anniversary have delivered market-like returns, but with 15–20 percent less risk since their launch,” said iShares in a statement. “Since inception, USMV is in the top 1 percent of all large-cap domestic equity ETFs and mutual funds by risk adjusted returns.”
A Few iShares Low Volatility ETF Peers
Other iShares low volatility ETFs include the iShares Edge MSCI Min Vol Japan ETF (iShares Trust (NYSE: JPMV) and the newly minted iShares Edge MSCI Min Vol USA Small-Cap ETF (iShares Trust ETF (NYSE: SMMV)).
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