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ETF Specialist

This Foreign Large-Cap Fund Should Provide a Smoother Ride

This ETF provides defensive exposure to stocks listed in foreign developed markets.

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 IShares Edge MSCI Minimum Volatility EAFE ETF (EFAV) offers a well-diversified foreign developed stock portfolio that takes a holistic approach to reduce volatility for a low fee. It should offer a smoother ride and better risk/reward profile than most of its peers over the long term, supporting its Morningstar Analyst Rating of Silver.

The fund attempts to create the least-volatile portfolio possible with large- and mid-cap stocks listed in developed markets in Europe, Australia, and Asia under a set of constraints. These include limiting sector and country tilts relative to the MSCI EAFE Index, which improves diversification. This strategy doesn't just target the least-volatile stocks. It also takes into account each stock's exposure to common risk factors and how they interact with each other to affect the portfolio's overall volatility.

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Daniel Sotiroff does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.