BlackRock introduces new iShares minimum volatility ETFs

Jun 6th, 2014 | By | Category: Equities

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BlackRock, the asset manager behind the iShares brand of exchange-traded funds, the world’s largest provider of ETFs, has launched three new minimum volatility ETFs designed to help investors manage risk in their portfolios.

BlackRock introduces new iShares minimum volatility ETFs

BlackRock has introduced three new iShares minimum volatility ETFs providing lower risk exposure to equities in Europe, Japan and Asia.

Listed on the NYSE Arca, the new ETFs build on the success of the provider’s original line-up of minimum volatility ETFs, which launched in 2011 and have nearly $7 billion in assets under management (AUM).

The ETFs aim to provide lower risk alternatives to international exposures.

The latest additions to the line-up are the iShares MSCI Europe Minimum Volatility ETF (EUMV), providing exposure to European equities, the iShares MSCI Japan Minimum Volatility ETF (JPMV), providing exposure to Japanese equities, and the iShares MSCI Asia ex Japan Minimum Volatility ETF (AXJV) providing exposure to Asian equities.

Patrick Dunne, Head of iShares Global Markets and Investments at BlackRock, said: “Volatility has generally increased over the past decade and investors are wondering how to adjust their portfolios to help minimize this risk, while still meeting their long-term goals. The traditional ‘safe havens’ of cash and government bonds have not provided much of an alternative, with returns at or near historical lows.”

He added: “BlackRock, with its long heritage of product innovation, created iShares Minimum Volatility ETFs to provide investors the opportunity to remain in the market while seeking to minimize the market’s peaks and valleys. These ETFs can provide a complement or alternative to the core indexed portfolio, potentially improving risk-adjusted returns over the long term.”

The ETFs are linked to indices developed by indexing giant MSCI which seeks to capture the movements of a target equity market with a reduced amount of risk. The indices are constructed from an optimal mix of less volatile stocks taking into account the volatility of each individual stock and the correlations between stocks, whilst applying a number of constraints to ensure the portfolio is sufficiently diversified and maintains the main characteristics of the broad market index. The application of constraints is important in making sure the index isn’t too heavily concentrated in one industry or country, which could create additional unintended risk.

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