“Conversely, EEMV has light or no allocations to some of historically higher beta emerging markets. For example, Brazil is EEMV’s smallest country weight and the fund features no exposure to Russian stocks,” according to InvestorPlace.
The low or minimum volatility strategy targets stocks that have lower expected risk or less idiosyncratic risks. Specifically, the strategy targets equities that exhibit lower beta, a measure of volatility or systematic risk of a security to that of the overall market. Consequently, minimum volatility portfolios are constructed with stocks that exhibit lower market risk or beta.
Investors considering EEMV should note that is fund, like other low volatility ETFs, focuses more more slow and stable companies, the low volatility strategy may underperform more growth-oriented stocks if the markets rally.
That is the case this year as EEMV is trailing traditional emerging markets strategies. On the other hand, EEMV performed significantly less poorly than cap-weighted emerging markets funds when those ETFs declined prior to 2016.
For more information on the low-vol strategy, visit our low-volatility category.