Managing Volatility With an International Equity ETF

When venturing overseas, investors often look to minimize equity market volatility, something an array of ETFs can help with. That group includes the VictoryShares International Volatility Wtd ETF (NASDAQ: CIL).

The VictoryShares International Volatility Wtd ETF, which debuted in August 2015, follows the CEMP International 500 Volatility Weighted Index. Simply because CIL offers an avenue to reducing international equity volatility does not mean investors sacrifice when it comes to returns. The ETF is up 23% year-to-date and resides near record highs.

Traditional market cap weighted indexes are typically dominated by the performance and risk profile of a handful of mega-cap companies. The CEMP volatility weighted indexes address that concentration challenge by weighting the stocks in the index based on volatility (standard deviation over the past 180 trading days), thereby offering broader exposure to the entire market.

The VictoryShares volatility weighted approach differs from competing methodologies that invest in low volatility companies. Instead, the indexes use volatility as a weighting mechanism to seek to achieve broad-market diversification. Over the past three years, Victory Capital has extended the approach beyond the US broad market to provide investors with volatility weighted solutions that seek to provide exposure to high dividends as well as international and emerging markets.

CIL holds 501 stocks with an average market capitalization of $31.9 billion, as of the end of the third quarter, according to issuer data. Japan is the ETF’s largest country weight at 20% while the U.K. and Canada combine for 20.8%. Overall, CIL features exposure to 22 countries, including 11 members of the Eurozone.