Emerging markets exchange traded funds have not inspired much confidence among investors this year, leaving market participants to search for “less bad” instead of “truly exceptional.”

One way of accessing less bad among emerging markets ETFs is to take the reduced volatility approach with a fund such as the iShares MSCI Emerging Markets Minimum Volatility ETF (NYSEArca: EEMV). Indeed, EEMV’s year-to-date loss is 7.4% compared to 11.5% for the MSCI Emerging Markets Index. That is not great, but it is certainly less bad.

Potential investors should be aware that since an ETF like EEMV focuses more more slow and stable companies, the low volatility strategy may underperform more growth-oriented stocks in an extended bullish rally.

“Low-volatility stocks have historically offered higher risk-adjusted returns than their more-volatile counterparts, suggesting that the market has not offered adequate compensation for incremental risk,” according to Morningstar analyst Michael Rawson.

EEMV’s “strategy has had a good track record–as measured by the back-tested performance of this fund’s benchmark index (the index’s live performance commenced in November 2009). Over the trailing 15- and 10-year periods through April 2015, this fund’s underlying index generated 408 and 335 basis points, respectively, of annualized outperformance versus the cap-weighted MSCI Emerging Markets Index, with significantly lower volatility,” according to Morningstar.

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