A Low-Risk Approach to the Global Market
Trim risk while staying diversified.
Global-stock funds hold a certain appeal for investors who want to reduce their portfolio's complexity while maintaining diversification across multiple global regions. Combining a broad portfolio with a minimum-volatility strategy should help reduce risk and smooth out returns relative to a market-cap-weighted benchmark. Throw in a low expense ratio and the result is a compelling, all-in-one fund for long-term investors. IShares Edge MSCI Minimum Volatility Global ETF's (ACWV) proven ability to cut back on risk and provide better risk-adjusted performance than a market-cap-weighted index earns a Morningstar Analyst Rating of Silver.
The fund tracks the MSCI ACWI Minimum Volatility Index. It uses an optimizer that selects and weights stocks from the MSCI All Country World Index in a way that minimizes expected volatility. It looks for stocks with low levels of expected volatility, but it also considers how stocks behave relative to one another. Therefore, it can overweight volatile stocks if their low correlations are expected to reduce the portfolio's overall volatility.
Daniel Sotiroff does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.