Preparing for volatility
One way in which investors may be able to position themselves for further volatility is to allocate carefully and with investments that are designed to perform over the long term, in both up and down markets. Low/minimum volatility ETFs1 can offer investors the ability to participate when markets are rising, but also have the potential to protect portfolios when markets are falling.
Strategies to consider
Low or minimum volatility ETFs seek to own lower-risk stocks in their respective markets. History tells us that these types of stocks can outperform higher volatility stocks over a full market cycle. As an example, the Natixis Seeyond International Minimum Volatility ETF (MVIN) returned an impressive 22.17% in the strong stock market of 2017, which was about 90% of the returns of non-US developed stock markets. However, MVIN lost only half as much of these markets during the market correction of February 2018.
View standardized performance for Natixis Seeyond International Minimum Volatility ETF (MVIN).
Defensive and offensive capabilities
Now could be a particularly appealing time to consider MVIN or other low/minimum volatility strategies that seek to protect portfolios from unexpected market turbulence while maintaining the capability to take advantage of potential growth opportunities. Many of these strategies can be held in a portfolio as a single non-US stock fund/ETF or can be combined with a higher-risk non-US stock fund/ETF to provide greater portfolio diversification.
1 An exchange-traded fund, or ETF, is a marketable security that tracks an index, commodity, bonds, or a basket of assets like an index fund. ETFs trade like common stock on a stock exchange and experience price fluctuations throughout the day as they are bought and sold. Seeyond sub-advises the Natixis Seeyond
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. Returns include changes in share price and reinvestment of dividends and capital gains, if any.
Gross expense ratio 1.76%. Net expense ratio 0.55%. As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense cap of the fund has been exceeded. This arrangement is set to expire on 04/30/2019. When an expense cap has not been exceeded, the fund may have similar expense ratios.
RISKS: Exchange-Traded Funds (ETFs) trade like stocks, are subject to investment risk, and will fluctuate in market value. Unlike mutual funds, ETF shares are not individually redeemable directly with the Fund, and are bought and sold on the secondary market at market price, which may be higher or lower than the ETF's net asset value (NAV). Transactions in shares of ETFs will result in brokerage commissions, which will reduce returns. Active ETFs, unlike typical exchange-traded funds, do not attempt to track or replicate an idex. Thus, the ability of the Fund to achieve its objectives will depend on the effectiveness of the portfolio manager. There is no assurance that the investment process will consistently lead to successful investing. Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Foreign securities may involve heightened risk due to currency fluctuations. Additionally, they may be subject to greater political, economic, environmental, credit, and information risks. Foreign securities may be subject to higher volatility than US securities, due to varying degrees of regulation and limited liquidity. Currency exchange rates between the US dollar and foreign currencies may cause the value of the fund’s investments to decline. Liquidity risk is the risk that the Fund may be unable to find a buyer for its investments when it seeks to sell them or to receive the price it expects. Decreases in the number of financial institutions willing to make markets in the Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk.
Before investing, consider the fund’s investment objectives, risks, charges, and expenses. Visit im.natixis.com/ETFs for a prospectus or a summary prospectus containing this and other information. Read it carefully.
Seeyond is operated in the US through Ostrum Asset Management U.S., LLC.
ALPS Distributors, Inc. is the distributor for the Natixis Seeyond International Minimum Volatility ETF. Natixis Distribution, L.P. is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, L.P.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.
The portfolio is actively managed and characteristics are subject to change. References to specific securities or industries should not be considered a recommendation