iShares’ low-volatility ETFs breeze through $4 billion mark

Feb 28th, 2013 | By | Category: Equities

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BlackRock’s US-listed suite of iShares minimum volatility exchange-traded funds (ETFs) has breezed past $4 billion in assets under management just 16 months after the ETFs were introduced.

iShares’ low-volatility ETFs breeze through $4 billion mark

Daniel Gamba, Head of iShares Americas Institutional Business.

Launched on the NYSE Arca in October 2011, the iShares Minimum Volatility ETFs are designed to help investors reduce volatility and improve risk-adjusted returns in popular domestic and international equity markets.

Composed of equity securities that exhibit less volatility than the market at large (often known as low-beta stocks), the funds provide investors with exposure to the upside price movement of developed and emerging equity markets, while seeking to provide a portfolio with downside protection.

As well as simply offering reduced volatility, low-beta stocks have historically demonstrated superior risk-adjusted returns than high-beta stocks and have, in many cases, also outperformed higher beta stocks in absolute terms.

The heightened volatility of the past few years – a by-product of events such as the credit crunch, the eurozone sovereign debt crisis, the Arab Spring and US fiscal cliff – has boosted the appeal of low-volatility strategies. Consequently, assets under management within these strategies, across various ETF providers, have grown considerably, making the product segment one the hottest areas of the market.

However, despite the explosive growth of this product segment as a whole, iShares’ performance has nonetheless been particularly impressive. For example, since January, the iShares MSCI Emerging Markets Minimum Volatility ETF and iShares MSCI US Minimum Volatility ETF have both individually surpassed $1 billion in assets, having attracted new inflows $554 million and $788 million, respectively.

Commenting on the milestone, Daniel Gamba, Head of iShares Americas Institutional Business at BlackRock, said: “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. Clients are attracted to iShares Minimum Volatility products for the risk-reward trade-offs and ease of implementations these ETFs offer. Investors also recognise there is significant evidence that Minimum Volatility funds improve risk-adjusted returns, while also cushioning portfolios during periods of heightened turbulence.”

iShares’ full suite of US-listed (NYSE Arca) minimum volatility ETFs is as follows:

iShares MSCI Emerging Markets Minimum Volatility ETF (EEMV)
iShares MSCI EAFE Minimum Volatility ETF (EFAV)
iShares MSCI USA Minimum Volatility ETF (USMV)
iShares MSCI All Country World Minimum Volatility ETF (ACWV)

iShares also offers a similar low-volatility line-up in Europe, listed on the London Stock Exchange and Deutsche Börse. Its European ETFs were introduced in December 2012 and have thus far accumulated $68 million in assets.

The European suite is as follows:

iShares MSCI Emerging Markets Minimum Volatility ETF (EMMV)
iShares MSCI Europe Minimum Volatility ETF (MVEU)
iShares S&P 500 Minimum Volatility ETF (SPMV)
iShares MSCI World Minimum Volatility ETF (MVOL)

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