ACWV ETF: Global Equity Fund, Low Volatility Portfolio, No Clear Investment Thesis

The iShares Edge MSCI Minimal Volatility Global ETF (
BATS:

Global equities. The fund has below-average losses in downturns and recessions. However, this difference is very small and there are few other advantages relative to global equity benchmarks. BlackRock manages the global equity index ETF. Global equity exposure that is diversifiable while minimising risk and volatility. It also doesn't have significant deviations by industry or country from its index. (which includes global equities that meet minimum trading, liquidity and size requirements. The fund then calculates the portfolio from these securities using returns, risk and covariance data. The portfolio is limited so that it does not differ from its parent index in terms of industry and country exposures. Although it may seem vague, the process is clearly defined, well-defined, consistent, and sensible. The portfolio construction process of's is intended to create a portfolio with lower risk and lower volatility. Although it does succeed, the overall impact is quite minimal. It experiences fewer losses when stocks go down but more gains when they are going up. The fund lost less than its benchmark in 1Q2020 due to the coronavirus pandemic. As stock markets quickly recovered, the fund saw lower gains in Q2 2020. The fund suffered greater losses than its benchmark in 1H2020. The MSCI world is the parent index of's. It has exposure to all segments of the equity industry and dozens more countries. The portfolio construction process of's ensures an equal, if not lower, level of diversification with investments in hundreds and thousands of securities from all sectors and dozens more countries.

The portfolio of's is designed to avoid significant deviations from its benchmark. From what I have seen, it does this successfully. There are minor differences in weight, such as Japan being overweight or underweighting tech. However, these differences do not matter. This is a consistent pattern. As expected from a low volatility fund, the fund tends to outperform in bull markets but underperforms during bear markets. Although the fund's risk-return profile is reasonable, it is not exceptional. Since inception, the fund has performed moderately below U.S. equity equities for most of the relevant time periods. I believe that the fund's underperformance over the long-term outweighs its lower losses in bear markets. Therefore, the fund's track record of performance is below-average. Currently, the yield is 2.2%. The dividend growth rate is reasonable with dividends increasing at 6.7% CAGR over the past decade. While's dividends tend to grow, the fund’s starting yield is so low that even long term investors don't see much income. The fund has a 5.Y yield on cost at 2.4% and a 10.Y yield at 3.6%. Its low yield on cost and dividend yield make it an inefficient income vehicle. Due to its exposure to low-cost international stocks,'s valuation is less than the average U.S. equity funds. However, the valuation of the fund is slightly higher than the average global equity funds. I believe that the fund's valuation is higher than its closest benchmark. This should be considered a negative by the fund and its investors. The fund invests in lower-volatility global equities. While the fund has few benefits for investors, it also has a few negatives. We manage portfolios of 8%-yielding exchange-traded funds (ETF) and closed-end funds (CEF), to make income investing simple for you. Click the button below to get a free trial!