IShares MSCI EAFE Minimum Volatility Factor ETF and iShares MSCI Min Vol EAFE Index ETF are well-crafted low-volatility funds that have proven their mettle in bear markets. They offer downside protection that should continue to breed a more attractive risk/reward profile than the foreign developed stock market, meriting Morningstar Medalist Ratings of Silver. 
The MSCI EAFE Minimum Volatility Index, which these index strategies track, whittles a defensive portfolio out of the MSCI EAFE Index, a broad benchmark that covers the mid- and large-cap foreign developed stock market. An optimizer builds the portfolios, considering stocks’ individual volatility as well as how their performance interrelates with other holdings. That blueprint favors sturdy firms like top-holding Swisscom AG SCMWY and Sanofi SNY, but it also admits more erratic stocks that zig when other holdings zag. For instance, Belgian biotechnology firm argenx’s ARGX volatile but unique performance patterns earned it more than triple the weight here than in the MSCI EAFE as of May 31, 2023.
Comprehensive portfolio constraints protect the funds from incidental risks and keep them diversified. The strategies moor their stock, sector, and country allocations to the parent index, which reduces firm-specific risk and ensures that consumer staples and utilities stocks—favorites among unconstrained low-volatility strategies—don’t dominate the portfolios. Controlling for risk factors like value prevents unintended style or factor bets. The funds also limit one-way turnover to 10% at each semiannual rebalance and face few transaction costs as a result.
This holistic tack has proven its efficacy. The MSCI EAFE Minimum Volatility Index’s returns were about 26% less volatile than its parent index from the U.S.-domiciled fund’s October 2011 inception through May 2023. Predictably, the index has trailed when stocks rallied but outperformed when they soured: since inception, it captured about 69% of the MSCI EAFE’s upside and 67% of its downside. Investors shouldn’t treat these strategies as bear-market panaceas, but their risk/reward profile should measure up well long-term.

Analyst Rating

Well designed.

Analyst

Ryan Jackson

Novan

GlaxoSmithKline

Banco Santander

Ormat Technologies

National Energy Services Reunited

Rogers

Ferrari

AstraZeneca

C3.ai

TotalEnergies SE

These funds earn Above Average Process Pillar ratings for assessing volatility at the portfolio-level and honoring a series of constraints that limit unintended risks.

Above Average

Process

BlackRock's industry-leading technology, global footprint, and extensive supporting cast earn an Above Average People Pillar rating. The team employs BlackRock's Aladdin platform to fulfill much of its portfolio management tasks, and global trading desks allow traders to conduct foreign transactions in a cost-effective way.
The U.S.-based iShares index equity team has endured some internal turnover at the top over the past few years. But index-tracking performance should remain tight, thanks to heavily automated processes, a large team of seasoned professionals and several long-tenured managers that remain at the helm. Amy Whitelaw left the team in February 2023 for another role within the organization. Paul Whitehead replaced Alan Mason as a manager in January 2022, when Mason left to focus on the firm's customized institutional indexing capabilities. The broader index equity group, co-headed by Jennifer Hsui and Paul Whitehead, will continue to oversee iShares equity ETFs.
The index portfolio management team that reported into Amy Whitelaw continues to oversee the Canadian-domiciled strategy. Her departure should have little impact on the fund’s day-to-day management given the automated processes and sprawling resources in place. 
All managers interact with a wider team of traders and managers around the globe to execute the funds’ day-to-day operations. The larger number of managers also limits the impact of personnel turnover when it does occur.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares Edge MSCI Min Vol EAFE ETF

EFAV tracks an index of developed-market equities, ex-US and Canada, selected and weighted to create a low volatility portfolio subject to constraints including sector exposure.

iShares Edge MSCI Min Vol Global ETF

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News for iShares Edge MSCI Min Vol EAFE ETF ETF (EFAV)