In back-tested historical data, the trailing 15- and 10-year performance of ACWV’s underlying index through the end of 2014 beat the cap-weighted MSCI ACWI by 393 and 202 basis points annualized, respectively, at a better risk-adjusted return.
However, potential investors should be aware that low-volatility strategies can underperform during short periods, especially in bull market conditions when riskier growth stocks typically outperform conservative, low-vol plays. [Globe-Trotting Low Vol ETF]
“In fact, the trailing five-year standard deviation of returns for this fund’s index of 8% was significantly lower than its corresponding cap-weighted index’s 14%. ACWX’s index was also less volatile than the S&P 500’s 12% during that same span. Part of this is due to the benchmark’s relatively lower drawdowns during bear markets. In 2008, when the MSCI ACWI fell 42% and the S&P 500 fell 37%, this fund’s benchmark index declined 25%,” notes Morningstar.
At 12.7%, Japan is the only other country with a double-digit weight in ACWV. The ETF charges just 0.2% per year.
iShares MSCI All Country World Minimum Volatility ETF
