An International ETF Option to Combat October Volatility

As the green foliage of spring and summer begin to take on an orange-brownish hue in the fall, it’s a reminder to investors of the volatility that could come in October. As such, investors may want to consider exchange-traded funds (ETFs) that offer protection against market volatility, particularly during a draw-down and upside when the markets gain.

“In years preceding elections, the record for October is more equivocal,” wrote Barron’s Randall W. Forsyth. “According to Jeffrey Hirsch, editor in chief of the Stock Trader’s Almanac, since 1950 October has been the second-worst month for the Dow Jones Industrial Average and the S&P 500 index, with nine positive returns and eight negative ones, averaging minus 0.5% and plus 0.1%, respectively. But October also marks the end of the worst six months for those averages, so be alert for should there be a steep drop, given the fundamental and political stories churning in the background, he advises.”

With the potential for volatility ahead, what funds are available in the marketplace that can address the concern for volatility risk while at the same time, realize any upward gains realized when markets rise? And what product can provide investors with the international exposure necessary for diversification?

One such product is the Natixis Seeyond International Minimum Volatility ETF (MVIN). MVIN focuses on developed markets and seeks to generate long-term capital appreciation with less volatility than typically experienced by international equity markets—the minimum volatility approach helps diminish portfolio risk.

MVIN gives investors:

  • Less volatile approach to diversify internationally
  • Long-term capital appreciation seeking less volatile international stocks
  • Actively managed ETF with the ability to adapt over time

For the reluctant equities investor, Global investment firm Goldman Sachs says it’s not safe to dive headfirst out of safe haven assets and back into stocks just yet. Ever since 1928, October has proven to be 28% higher in terms of volatility.

It’s something to consider, especially for the queasy investor who can’t stomach the volatile market moves. Per a CNBC report, “ Cboe Volatility Index, a measure of the 30-day implied volatility of U.S. stocks also known as the VIX or “fear gauge,” has been tame this month as trade tensions between the U.S. and China eased and Treasury yields bounced back from their historic lows.”

One reason for October’s volatile nature is the reporting of third-quarter earnings. A volley of hits or misses in earnings can send the markets fluxing.

For more market trends, visit ETF Trends.