After European Central Bank President Mari Draghi’s remarked on higher volatility as the new norm, investors who are looking at European markets may consider low-volatility exchange traded fund options to limit the swings.
For example, the iShares MSCI Europe Minimum Volatility ETF (NYSEArca: EUMV) is beginning to outpace the Vanguard FTSE Europe ETF (NYSEArca: VGK) – both EUMV and VGK track Eurozone markets, along with the United Kingdom and Switzerland. Over the past week, EUMV gained 0.3%, whereas VGK dipped 0.1%.
EUMV tracks the MSCI Europe Minimum Volatility Index, which targets developed European market stocks that have exhibited lower volatility characteristics relative to the broader European developed markets.
Additionally, while euro-currency-hedged Eurozone ETFs were largely trending down, the PowerShares Europe Currency Hedged Low Volatility Portfolio (NYSEArca: FXEU) showed a lower dip of 1.5% over the past week, compared to the 2.5% decline in the WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ).
FXEU tracks members of the S&P Eurozone BMI Index to form the S&P Eurozone Low Volatility USD Hedged Index that displayed the lowest volatility over the trailing 12-months. [Some Combination ETFs Merit Consideration]
Mari Draghi shook up the markets after he told investors to get used to bond volatility on Wednesday, which triggered a bout of volatility in global government bond markets and unsettled equity prices in both U.S. and European markets this week.