iShares launches first suite of minimum volatility ETFs in Europe
iShares, the exchange-traded funds platform of BlackRock, has launched four ETFs based on minimum volatility indices on the London Stock Exchange.
The new funds provide access to a range of markets and seek to offer reduced volatility compared to standard market-capitalisation weighted indices.
Since the onset of the financial crisis, overall equity market volatility has risen both in terms of the magnitude and the frequency of volatile episodes. Between 2007 and 2011, the MSCI Europe Index saw +/- two per cent daily moves more than three times a month on average, compared to the previous three years where this only happened approximately five times a year. This heightened volatility over the recent years has deterred many investors from accessing equity markets.
The four new ETFs are the iShares MSCI Europe Minimum Volatility fund, the iShares MSCI World Minimum Volatility fund, the iShares MSCI Emerging Markets Minimum Volatility fund and the iShares S&P 500 Minimum Volatility fund.
Each of the four funds is optimised and physically backed and they are the first ETFs, domiciled in Europe, to be created on their respective indices.
“These new funds are suitable for investors looking for a smoother ride in today’s investment world. This new suite aims to offer an attractive investment over the longer term with the potential to provide a better trade-off between risk and return, something that simply holding cash does not do,” says Stephen Cohen (pictured), head of iShares investment strategies and insights EMEA.
The funds have a total expense ratio of between 20 and 40 basis points.
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