Megaphone icon ETF Database is now VettaFi. Read More >
ETFdb Logo
ETFdb Logo
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • Entrepreneur ETF
    • Equity ETF
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Future ETFs
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Modern Alpha
    • Multi-Asset
    • Multi-Factor
    • Nasdaq Investment Intelligence
    • Portfolio Strategies
    • Retirement Income
    • Smart Beta
    • Thematic Investing
    • Volatility Resource
  • Database
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
    • ETFs Future-Forward 2021: An iShares Investing Symposium
    • Three Themes for 2021: An iShares & MSCI Investing Symposium
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Videos & Podcasts
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Low Volatility Proves Its Mettle in Emerging Markets
ETF Education Channel
Share

Low Volatility Proves Its Mettle in Emerging Markets

Tom LydonApr 07, 2022
2022-04-07

Experienced investors know emerging markets equities are usually more volatile than their developed markets counterparts. Dating back to last year, investors are getting that message, thanks in large part to China.

This year, it’s Russia that’s adding unnecessary turbulence to the emerging markets equity complex. However, there are ways for investors to remain engaged with this asset class while limiting volatility. Enter the Invesco S&P Emerging Markets Low Volatility ETF (EELV A).

EELV, which turned 10 years old earlier this year, follows the S&P BMI Emerging Markets Low Volatility Index. That index is comprised of the 200 least volatile stocks over the trailing year in the S&P Emerging Plus LargeMidCap Index. If that methodology sounds familiar, that’s because it’s what’s used by a variety of domestic low-volatility exchange traded funds issued by Invesco. Past performance doesn’t guarantee future returns, but EELV’s index has compelling history on its side.

“By losing less when markets fall, low volatility strategies have typically outperformed over the long run. This phenomenon is observable universally across markets.. The resulting performance pattern is captured in Exhibit 2, which shows the relative performance of the S&P BMI Emerging Markets Low Volatility Indexm against the monthly performance of the S&P Emerging Plus LargeMidCap,” says Fei Mei Chan of S&P Dow Jones Indices.

EELV is living up to its objective of skirting volatility and generating decent performance in the process. Over the past year, the ETF is up more than 10% while the MSCI Emerging Markets Index is lower by 14.09%.

“In times of high stress, low volatility strategies tend to have more bandwidth to offer a buffer against volatility. This has proven to be true in the case of the S&P 500 and S&P 500 Low Volatility Index so far in 2022, declining 4.6% and 1.7%, respectively,” adds Chan. “It has been even more impactful in the case of emerging markets, where conditions are innately more volatile. In the first quarter of 2022, the S&P BMI Emerging Markets Low Volatility Index outperformed its underlying index by 11.3%.”

Just as sector allocations are relevant with domestic low-vol strategies, geographic exposures are meaningful with an ETF such as EELV. As of April 1, the fund allocates more than 36% of its weight to Taiwan and Thailand and has a high oil price kicker by way of a 10.23% weight to Saudi Arabia. Conversely, EELV devotes just 9% of its roster to Chinese equities and has no exposure to Russia.

For more news, information, and strategy, visit the ETF Education Channel.

Loading Articles...
Help & Info
  • Contact Us
  • Mission Statement
  • Press
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © ETF Flows LLC
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

Equity ETF Channel

Retirement Portfolio Redux: Is the 60%-40% Portfolio Dead?

Debbie CarlsonOct 22, 2020
2020-10-22

With the 10-year U.S. Treasury yield hovering below 1% and Federal Reserve Chairman Jerome Powell...

Equity ETF Channel

Portfolio Diversification Isn't Dead, It Was Just Sleeping

Debbie CarlsonOct 15, 2020
2020-10-15

Investors could be forgiven to think there was no reason to invest outside of the U.S. for the...

}
X