The Natixis Seeyond International Minimum Volatility ETF (MVIN) marked its third anniversary in October 2019 with a 5-star rating from Morningstar – a recognition of the strategy’s potential for delivering strong risk-adjusted returns relative to competing strategies. The success of the strategy in the 3-year period following its inception – grounded in an actively-managed, long-term approach – reflects its manager’s belief in the adage “Slow and steady wins the race.”
Opportunity in the Low Vol Anomaly
“Professional low vol investors understand the low volatility anomaly,” says Alex Pire, Natixis Investment Managers VP and Client Portfolio Manager for Seeyond. The term “low volatility anomaly” refers to the notion that lower-risk stocks tend to outperform higher-risk stocks over time. “Long-term market data supports the idea,” adds Pire, “so it’s not surprising that low vol equity investing tends to be a winning long-term investment strategy.” Seeyond, a Natixis affiliate, manages over $2B in assets in low vol strategies worldwide.
Resiliency in Turbulent Conditions
Any investment strategy that loses a significant amount of returns due to a down market needs to make up for that loss to return to its previous position. For example, if a strategy loses 50% of its returns in a sharp decline, it would need to return an astounding 100% to get back to where it was. Low vol strategies can protect against this scenario by being built to avoid large drawdowns, which can improve their potential to maintain valuation over time.
Focused on Low Correlations
Minimum volatility strategies like MVIN not only seek out low volatility stocks, they also build a portfolio of stocks that have low correlation to each other. This diversified approach can help prevent an overall drawdown in the portfolio’s valuation during periods of market decline. Beyond that, strategies like MVIN typically have a very low beta, a measure of a strategy’s volatility relative to its index. Put another way, low volatility/minimum volatility strategies are designed so that they do not move similarly to their broad equity indexes. In fact, MVIN is so differentiated from its broader market index that some investors view it as an international equity allocation and as a type of alternative investment that can help to enhance a portfolio’s diversification.
If you have questions about how actively-managed low vol ETF strategies like MVIN can benefit you or clients, please contact your Natixis relationship manager.
Past performance is no guarantee of future results.
Diversification does not guarantee a profit or protect against a loss.
Beta is a measure of the volatility, or systematic risk, of a security or portfolio, in comparison to the market as a whole.
Correlation is a statistical measure of the strength of the relationship between the relative movements of two variables.
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. Unlike typical exchange-traded funds, there are no indexes that the Fund attempts to track or replicate. 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.
Morningstar ratings as of 4/6/2020.
Morningstar Category: Foreign Large Blend– NAV Overall rating derived from weighted average of the 3-, 5- and 10-year (if applicable) Morningstar Rating metrics; other ratings based on risk-adjusted returns. Overall out of 628 funds ★★★★★ Three years out of 628 funds ★★★★★
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ used to rank the fund against other funds in the same category. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly excess performance, without any adjustments for loads (frontend, deferred, or redemption fees), placing more emphasis on downward variations and rewarding consistent performance. Exchange-traded funds and open-ended mutual funds areconsidered a single population for comparative purposes. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom10% receive 1 star (each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variationsin the distribution percentages). Past performance is no guarantee of future results. ©2020 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2)may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
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.
Before investing, consider the fund’s investment objectives, risks, charges, and expenses. Visit im.natixis.com for a prospectus or a summary prospectus containing this and other information. Read it carefully.
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.
Seeyond operates in the US through a participating affiliate arrangement with Natixis Advisors, L.P.