As human beings, we are predisposed to act emotionally. Contrary to the central assumption of modern portfolio theory – that investors behave rationally – most of us allow our emotions to help guide our decision-making. While investors are intent on buying low and selling high, they can make simple cognitive errors and suffer emotional biases, which can lead to poor choices. These can include performance chasing, market timing, or ignoring the importance of portfolio rebalancing.

Help Me Help Myself
When markets get volatile and investors get emotional, many will seek advice from their financial professional. In fact, according to the 2018 Natixis Investment Managers Global Survey of Professional Fund Buyers, 78% of financial professionals describe their role as guiding clients through emotional decisions.2

In volatile markets, many financial professionals advise clients that they are more likely to reach their long-term investment goal when they remain invested and avoid short-term emotional decisions – like getting out of the market during episodes of turbulence.

Can Market Noise Be Muted?
The Natixis Seeyond Minimum Volatility ETF - MVIN1 seeks to outperform the broad international equity market over a full market cycle, while reducing risk. It does so by following a consistent process for selecting low volatility stocks. Financial professionals often find minimum volatility strategies helpful in their quest to reduce the magnitude of drawdowns – which can help investors avoid emotional decision making and stay invested through all market conditions. As an example, compared to the MSCI EAFE Index, MVIN conserved capital consistently after the market shock on January 25, 2018.

WEB80 0818 Pire Managing Emotional Investing CHART2 L
Source: Morningstar
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. A fund's performance for short time periods may not be indicative of future performance.


In addition to potentially reducing the magnitude of market drawdowns, minimum volatility strategies can offer less turbulence during periods of growth. From January 1 through August 15, 2018, MVIN experienced a narrower moving average range than the MSCI EAFE Index.

WEB80 0818 Pire Managing Emotional Investing CHART1 L
Source: Morningstar
Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results.


Investors Are Only Human
By aiming to mute the impact of market events in both down and up markets, minimum volatility strategies have the potential to help financial professionals and their clients better manage the emotional challenges that today's investment landscape may cause.

 


1 Seeyond is an affiliate of Natixis Investment Managers dedicated to Active Quantitative strategies.

2 Natixis Investment Managers, Global Survey of Financial Professionals conducted by CoreData Research in February–March 2018. Survey included 2,775 financial professionals in 16 countries.

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 Minimum Volatility ETF - MVIN.

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.

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 index. 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.

The MSCI EAFE Index (Net) is a free float-adjusted market capitalization index designed to measure large and mid-cap equity performance in developed markets, excluding the U.S. and Canada. The Index includes countries in Europe, Australasia, and the Far East.

The Fund seeks long-term capital appreciation with less volatility than typically experienced by international equity markets.

A fund’s performance for short time periods may not be indicative of future performance. Long-term performance is available at Natixis Seeyond Minimum Volatility ETF - MVIN.

This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis”) and does not sponsor, endorse or participate in the provision of any Natixis services, funds or other financial products.


Indexes are unmanaged, do not incur fees, and include reinvestment of dividends and interest income, if any. It is not possible to invest in an index.

Investing involves risk, including the risk of loss.

Before investing, consider the fund's investment objectives, risk, charges, and expenses. Visit im.natixis.com for a prospectus or a summary prospectus containing this and other information. Read it carefully.

Ostrum Asset Management U.S., LLC (“Ostrum US”) is the investment subadviser to the Natixis Seeyond International Minimum Volatility ETF. Ostrum US had $409.7B assets under management, and Seeyond oversees $9.8B as of June 30, 2018. Seeyond is operated in the US through Ostrum US.

ALPS Distributors, Inc. is the distributor for the Natixis Seeyond International Minimum ETF. Natixis Distribution, L.P. is a marketing agent. ALPS Distributors, Inc. is not affiliated with Natixis Distribution, L.P.

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