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Global Low-Volatility ETFs to Brave the 2nd Wave of Coronavirus
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The coronavirus outbreak is showing no signs of dying down. Going by Johns Hopkins University, more than 9.4 million of confirmed coronavirus cases have been reported globally. Moreover, the WHO is expecting the figure to soon reach the grim mark of 10 million cases, per a CNN report. Going by the same report, the total number of coronavirus cases in Latin America have tripled in the past month, crossing 2 million. Notably, Beijing, South Korea and Germany are trying to control the second wave of the outbreak and are taking the initiatives to re-impose some lockdown measures in areas where the emergence of new cases is being observed.
Meanwhile, states like Florida, California, Carolinas, Texas and Arizona in the United States are seeing increasing number of hospitalizations every day. United States has witnessed more than 2.3 million confirmed cases, including at least 121,979 deaths. Per a Bloomberg report, 180,000 Americans are expected to die due to coronavirus by October.
In case of a second wave of coronavirus outbreak, major retailers, factories, restaurants and hotels might have to shut down operations domestically and abroad. The reopening of global economies had definitely come as a ray of hope for investors. Highlighting the gloomy scenario, the World Trade Organisation (WTO), has said that the pandemic resulted in an 18.5% decline in global trade in the second quarter of 2020, per a CNN report.
The International Monetary Fund has downgraded its outlook for the global economy and now expects a deeper global recession. It is predicting output to shrink 4.9% in 2020, much deeper than the 3% contraction estimated in April (according to a Reuters report).
Also, on the trade front, things can be worrisome as the United States is considering new tariffs on $3.1 billion of exports from France, Germany, Spain and the U.K., per a Bloomberg report.
ETFs to Play
Against such a backdrop, seeking refuge in low-volatility products seems judicious. These global low-volatility products could be intriguing choices 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.
The United States (51.7%) is the top holding of the fund, followed by Japan (12.4), and Canada (5.2%). Information Technology, Financials, Consumer Staples, Communication and Health Care get a double-digit weight in the fund. The fund charges 20 bps in fees (read: Is it the Right Time to Invest in Minimum Volatility ETFs?).
EFAV looks to replicate the performance of international equity securities that have lower absolute volatility. No single stock makes up more than 1.58% of the portfolio. Country-wise, the fund appears more focused on Japan (30.9%), Switzerland (14.1%) and United Kingdom (9.3%) equities. The fund charges 20 bps in fees (read: Try These ETFs to Counter the Coronavirus-Induced Volatility).
iShares Edge MSCI Min Vol Europe ETF
It tracks the MSCI Europe Minimum Volatility Index, giving exposure to 172 European stocks having low-volatility characteristics relative to the broader European developed equity markets. The product charges 25 bps a year.
Like many other funds in the space, the ETF provides higher diversification benefits with none of the securities making up for more than 1.54% of assets. In terms of country exposure, Switzerland takes the largest share at 20.8%, followed by United Kingdom (17.9%), France (12%) and Germany (11.4%) (read: Time for Europe ETFs on Stimulus Optimism?).
This ETF provides stable income through investment in stocks of profitable U.S. companies, with relatively high dividend yields, lower price and earnings volatility. Utilities, Real Estate and Consumer Staples make up the top three sectors with a double-digit allocation each. It charges 27 bps in annual fees (read: Worried About Volatility? Invest in These ETFs).
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Global Low-Volatility ETFs to Brave the 2nd Wave of Coronavirus
The coronavirus outbreak is showing no signs of dying down. Going by Johns Hopkins University, more than 9.4 million of confirmed coronavirus cases have been reported globally. Moreover, the WHO is expecting the figure to soon reach the grim mark of 10 million cases, per a CNN report. Going by the same report, the total number of coronavirus cases in Latin America have tripled in the past month, crossing 2 million. Notably, Beijing, South Korea and Germany are trying to control the second wave of the outbreak and are taking the initiatives to re-impose some lockdown measures in areas where the emergence of new cases is being observed.
Meanwhile, states like Florida, California, Carolinas, Texas and Arizona in the United States are seeing increasing number of hospitalizations every day. United States has witnessed more than 2.3 million confirmed cases, including at least 121,979 deaths. Per a Bloomberg report, 180,000 Americans are expected to die due to coronavirus by October.
In case of a second wave of coronavirus outbreak, major retailers, factories, restaurants and hotels might have to shut down operations domestically and abroad. The reopening of global economies had definitely come as a ray of hope for investors. Highlighting the gloomy scenario, the World Trade Organisation (WTO), has said that the pandemic resulted in an 18.5% decline in global trade in the second quarter of 2020, per a CNN report.
The International Monetary Fund has downgraded its outlook for the global economy and now expects a deeper global recession. It is predicting output to shrink 4.9% in 2020, much deeper than the 3% contraction estimated in April (according to a Reuters report).
Also, on the trade front, things can be worrisome as the United States is considering new tariffs on $3.1 billion of exports from France, Germany, Spain and the U.K., per a Bloomberg report.
ETFs to Play
Against such a backdrop, seeking refuge in low-volatility products seems judicious. These global low-volatility products could be intriguing choices 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.
iShares Edge MSCI Min Vol Global ETF (ACWV - Free Report)
The United States (51.7%) is the top holding of the fund, followed by Japan (12.4), and Canada (5.2%). Information Technology, Financials, Consumer Staples, Communication and Health Care get a double-digit weight in the fund. The fund charges 20 bps in fees (read: Is it the Right Time to Invest in Minimum Volatility ETFs?).
iShares Edge MSCI Min Vol EAFE ETF (EFAV - Free Report)
EFAV looks to replicate the performance of international equity securities that have lower absolute volatility. No single stock makes up more than 1.58% of the portfolio. Country-wise, the fund appears more focused on Japan (30.9%), Switzerland (14.1%) and United Kingdom (9.3%) equities. The fund charges 20 bps in fees (read: Try These ETFs to Counter the Coronavirus-Induced Volatility).
iShares Edge MSCI Min Vol Europe ETF
It tracks the MSCI Europe Minimum Volatility Index, giving exposure to 172 European stocks having low-volatility characteristics relative to the broader European developed equity markets. The product charges 25 bps a year.
Like many other funds in the space, the ETF provides higher diversification benefits with none of the securities making up for more than 1.54% of assets. In terms of country exposure, Switzerland takes the largest share at 20.8%, followed by United Kingdom (17.9%), France (12%) and Germany (11.4%) (read: Time for Europe ETFs on Stimulus Optimism?).
Legg Mason Low Volatility High Dividend ETF (LVHD - Free Report)
This ETF provides stable income through investment in stocks of profitable U.S. companies, with relatively high dividend yields, lower price and earnings volatility. Utilities, Real Estate and Consumer Staples make up the top three sectors with a double-digit allocation each. It charges 27 bps in annual fees (read: Worried About Volatility? Invest in These ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>