Amid fears of a slow economic recovery and a second wave of the coronavirus, some investors continue steering clear of ex-US equities, but the Natixis Seeyond International Minimum Volatility ETF (MVIN) represents a compelling avenue for those looking to revisit the asset class.
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.
“Re-opening and the threat of a second wave (or even an extension of the first wave) should keep equities range-bound for some time across developed markets but finding the more resilient companies should create some opportunities,” said Alex Pire of Natixis in an interview with ETF Trends.
Increased chatter about a recession and focus on trade wars have provided a wake-up call to investors who are being told to make sure and look to diversify their portfolio internationally. The past few months provided a good reason for not just simply putting a lot of money into the S&P index, expecting it to go up.
MVIN Matters Today
The actively managed MVIN typically holds 80 to 160 stocks, which are selected based on correlations and standard deviation – traits that increasingly relevant in today’s turbulent environment.
“Given strong government and central bank intervention across the world it is unlikely we will re-test the lows but an environment of uncertainty going forward is inevitable,” Piré, who is Head of Client Portfolio Management for Seeyond at Natixis Investment Managers.
Looking at the active management component of MVIN is such that being able to look at the model weekly means a team can really contrast and continually reassess how the market is evolving. This means appropriate decisions can be made in the portfolio, so it can be regularly repositioned towards its ultimate goal of providing a minimum volatility portfolio.
“Due to this environment, investors across the world are more than ever glued to their screens, any positive news is quickly assimilated into bullish sentiment while underwhelming news creates the potential for further selling pressure creating whiplash for investors,” said Pire.
Making a low volatility strategy such as MVIN all the more appealing today is lingering uncertainty that’s permeating markets around the world.
“Investors are trying to make sense of the environment and psychologically it makes sense to look for less uncertainty and although that may be reflected as negative news (lower earnings, bankruptcy fillings…) it is still less uncertainty than before which leads to an overall sense of positive for investors,” notes Pire.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.