Global stock markets fell sharply in the wake of US President Donald Trump’s tariff announcement on April 2.
While much of these losses have been recouped, high volatility remains, with the VIX index surging above 50 points, its highest level since the start of the covid pandemic.
For investors who want to reduce risk, yet remain invested and ready for the next market rebound, risk-oriented strategic-beta exchange-traded funds are an option.
Strategic beta, also known as smart beta, is a form of systematic active management. These ETFs are tied to indexes that make active bets against broad market-cap-weighted indexes that serve as their starting points.
4 Low Volatility ETFs for Investors
Below are Morningstar’s four top-rated low volatility equity ETFs, each with a different geographic remit: global markets, US, emerging markets, and Europe. A positive Morningstar Medalist Rating means Morningstar analysts believe a fund has the greatest chance of outperforming its category over the long term.
iShares Edge MSCI World Minimum Volatility UCITS ETF MVOL
The £3.3 billion iShares Edge MSCI World Minimum Volatility UCITS ETF fell 2.91% over the past month. The loss on the passively managed fund edged out the 5.64% loss on the average fund in the global large-cap blend equity category, leaving it in the fifth percentile for performance. The fund edged out its benchmark, the Morningstar Global Target Market Exposure Index, by 2.86 percentage points. Over the past year, the iShares fund rose 8.3%, while the average fund in its category rose 1.3%.
iShares Edge S&P 500 Minimum Volatility UCITS ETF MVUS
The £1.2 billion iShares Edge S&P 500 Minimum Volatility UCITS ETF fell 5.38% over the past month. The fund edged out its benchmark, the Morningstar US Large-Mid Cap Index, by 1.54 percentage points. Over the past year, the iShares fund rose 5.03%.
iShares Edge MSCI EM Minimum Volatility UCITS ETF USD EMMV
The iShares Edge MSCI EM Minimum Volatility UCITS ETF USD (Acc) fell 2.39% over the past month. The fund edged out its benchmark, the Morningstar Emerging Markets Target Market Exposure Index, by 2.82 percentage points. Over the past year, the iShares fund rose 2.29%.
iShares Edge MSCI Europe Minimum Volatility Advanced UCITS ETF MVEE
The £37.1 million iShares Edge MSCI Europe Minimum Volatility Advanced UCITS ETF rose 0.22% over the past month. The gain on the passively managed fund beat the 2.69% loss on the average fund in the Europe large-cap blend equity category, leaving it in the first percentile for performance. The fund beat its benchmark, the Morningstar Developed Europe Target Market Exposure Index, by 3.25 percentage points. Over the past year, the iShares fund rose 8.73%, while the average fund in its category rose 4.24%.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
