EFAV is designed to be the low volatility answer to the MSCI EAFE Index
. Over the past 90 days, the minimum volatility fund is higher by 3.3% while the widely followed MSCI EAFE Index
is lower by 0.10%.
Indeed, the S&P 500 Index of mostly large-capitalization domestic stocks has outperformed the MSCI EAFE Index
of international stocks by an annualized 7.5 percent since the start of the bull market.
stocks (MSCI EAFE Index
) and emerging market stocks (MSCI Emerging Markets Index) having been 16.3 percent, 8.7 percent and 5.2 percent respectively.
The fund's portfolio managers, Fred Copper and Daisuke Nomoto, will invest in companies that they believe are attractively priced and have better growth, returns and profitability versus the fund's benchmark, the MSCI EAFE Index
.1 Generating ideas with Columbia Threadneedle's global research team, the portfolio managers believe that stocks with a combination of these attributes tend to outperform through market cycles.
REFA seeks to outperform the MSCI EAFE Index
, with an expense ratio of 42 basis points.
Optimism on the geopolitical front and a stronger Japanese Yen helped the MSCI EAFE index
gain a return of 6.8 percent in the first quarter.
1, 2009, the S&P 500 experienced average annualized returns of -2.89%, compared to -0.08% for the MSCI EAFE Index
and 9.48% for the MSCI Emerging Markets Index.
The blue line in the accompanying chart plots, from the end of 1999 through the first quarter of this year, an index of return of the MSCI EAFE index
(covering large companies in the markets of Europe, Asia and the Far East), while the purple line represents the Standard & Poor's (S&P) 500, and the green line at the bottom shows the correlation between their returns for rolling 24-month periods.
For instance, in three out of the last four calendar years, the Standard & Poor's 500 index has topped the chief international benchmark, the MSCI EAFE Index
. In total, the S&P has gained 15.9% annually over that four-year period, while the EAFE returned just 8.6% per year.
The S&P 500 Total Return Index finished the quarter up 2.9 percent, and the MSCI EAFE Index
rose approximately 1.5 percent.
Puts protecting against a 10 per cent drop in the iShares MSCI EAFE Index
Fund cost 5.79 points more than calls betting on a 10 per cent increase on May 3, according to three-month data compiled by Bloomberg.