Stocks listed in emerging markets tend to be riskier than those focused on developed markets, and a number of these risks are prevalent in low-cost index-tracking funds from Vanguard, iShares, and Schwab. Country biases, volatile currency movements, and state-owned enterprises are among the risks investors need to be mindful of in developing nations. Broad diversification is a starting point, but further steps can be taken to reduce risk and volatility. A minimum volatility strategy, like iShares Edge MSCI Minimum Volatility Emerging Markets ETF (EEMV), is a compelling alternative that should provide investors with more stable results over a cap-weighted, index-tracking fund.
IShares Edge MSCI Minimum Volatility offers a well-diversified and low-cost portfolio that should provide a smoother ride and better risk/reward profile than most of its peers in the diversified emerging-markets Morningstar Category. It earns a Morningstar Analyst Rating of Silver.
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Daniel Sotiroff does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.