This is a global low-volatility ETF that tracks the MSCI Global Minimum Volatility (USD) Index. It covers both developed and emerging markets, and maintains a holdings mix that has been mathematically adjusted to lower the volatility of the entire portfolio.

It is suited to medium- to long-term investors who want global diversification while reducing market volatility risk.

It is a passive (index-tracking) ETF launched in 2011 by BlackRock (iShares).

The index is built from the global equity universe using a quantitative methodology that simultaneously lowers the volatility of individual stocks and the correlations between them. Rather than simply holding stocks with low volatility, it adjusts stock weights so as to reduce the volatility of the portfolio as a whole.

• True global low-volatility exposure spanning both developed and emerging markets
• A portfolio-level volatility minimization approach that sets it apart from simple low-volatility screening

Assets under management (AUM) stand at $3.4B, and the expense ratio is 0.20% per year.

Unlike similar low-volatility ETFs such as EFAV (developed markets) and EEMV (emerging markets), it offers low-volatility exposure to the entire global market through a single fund, which is an advantage in terms of simplifying a portfolio.

Global defensive and low-volatility strategies tend to lag in rate-hike phases as demand for them as a bond substitute declines, and tend to be re-rated when interest rates stabilize or turn lower. With a high weighting in defensive sectors such as healthcare, consumer staples and utilities, the strategy has delivered relatively solid performance during economic slowdowns.

A recurring pattern has been that capital flows into low-volatility strategies stand out whenever market uncertainty rises. Demand for defensive ETFs tends to increase when global growth concerns and geopolitical risks come to the fore, while in periods of stronger risk appetite, money tends to flow out, creating a cyclical pattern.

The fund pursues the twin goals of global diversification and volatility reduction, but it may underperform the market average in bull markets.

EFAV, shown in the table, is a low-volatility ETF targeting developed markets only, with no emerging-market exposure and a similar expense level. EEMV is a low-volatility ETF dedicated to emerging markets, and EELV and IDLV take similar low-volatility approaches. QLVD is a low-volatility ETF for developed markets excluding the US. Compared with investing in the two regions separately (EFAV + EEMV), ACWV allows unified management through a single fund, but offers less flexibility to adjust regional weights. For additional US low-volatility exposure, you could consider USMV, and if you need a dividend strategy with reduced short-term price swings, SPLV is also worth comparing.

Here are the key points to review before investing in ACWV. Although it is a defensive global ETF, it is important to understand the interest rate environment, currency fluctuations and the opportunity cost in bull markets in advance.

Opportunities to participate in bull markets are limited, and defensive sectors may come under pressure when interest rates rise. Currency risk from holding multiple global currencies should also be taken into account.

This is a defensive ETF suited to investors who want global diversification and volatility reduction at the same time. If you prefer to manage developed and emerging markets separately, you can combine EFAV and EEMV, and if your focus is on the US, USMV is a direct alternative.