Getting volatility protection is certainly a must in the current market when unknowns like rising inflation and the ongoing pandemic present headwinds, but FlexShares can offer coverage with three ETFs.
Whether investors want to add low volatility protection to complement their current portfolios or use the ETFs as a standalone product to capture upside and get protection simultaneously, FlexShares has an ETF that can fit these needs. For ETF investors who don’t want to venture outside the U.S., there’s the FlexShares US Quality Low Volatility Index Fund (QLV).
QLV seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Quality Low Volatility Index. The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess lower overall absolute volatility characteristics relative to the Northern Trust 1250 Index, a float-adjusted market capitalization-weighted index of U.S.-domiciled large- and mid-capitalization companies.
Volatility Protection in Developed and Emerging Markets
For investors who want to get international exposure but don’t want the volatility of investing in riskier markets, there’s the FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLVD). Per its fund description, QLVD seeks investment results that correspond generally to the Northern Trust Developed Markets ex-U.S. Quality Low Volatility Index.
The underlying index is designed to reflect the performance of a selection of companies that, in aggregate, possess lower overall absolute volatility characteristics relative to a broad universe of securities domiciled in developed market countries, excluding the United States. The top three country exposures are currently Japan, Switzerland, and the United Kingdom.
Investors who are looking for more growth potential in emerging markets (EM) but are more risk-averse can look at a fund like the FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE). The fund seeks investment results that correspond generally to the price and yield performance of the Northern Trust Emerging Markets Quality Low Volatility Index, which is designed to reflect the performance of a selection of companies that, in aggregate, possess lower overall absolute volatility characteristics relative to a broad universe of securities domiciled in emerging market countries.
It’s an opportune time for QLVE, which can capture upside in emerging markets while limiting volatility, should the dollar continue to gain strength. This volatility protection could serve well in 2022 as the U.S. central bank looks to raise rates.
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