This is an active ETF that invests in developed and emerging market stocks outside the US while adjusting its risk exposure based on real-time volatility signals. When volatility rises, it reduces equity exposure, and when conditions stabilize, it increases exposure again to participate in the market recovery.

It suits medium-risk investors who want exposure to international stocks but also want to limit downside risk when market volatility increases.

It is an actively managed ETF run by Horizon.

The fund runs two strategies together: an equity strategy that invests in developed and emerging market stocks outside the US, and a risk management strategy that adjusts exposure based on real-time volatility signals. When market volatility rises, it systematically reduces equity exposure to defend against declines, and when volatility settles, it raises exposure again to take part in the market recovery.

• Systematic, volatility-based risk management
• A balance between downside protection and participation in recoveries

Assets under management (AUM) stand at $765.9M, and the expense ratio is an annual 0.82%.

Compared with general international equity ETFs such as RODM and IDEQ, the main point of comparison is the volatility-based risk management strategy.

A volatility-based risk management strategy tends to cut exposure during sharp market declines to soften drawdowns, and to raise exposure during stable or recovering periods to participate in gains. However, if exposure is still reduced during a sudden rebound, the fund may miss part of the recovery.

Risk management products tend to attract inflows from defensive demand when market uncertainty rises, and money sometimes shifts into this group of products when interest in volatility management increases. It is also worth noting that performance varies with the volatility environment and the timeliness of the signals.

Volatility-based downside protection is the main strength, while delayed participation in sharp rebounds, currency exposure and management fees are the points to consider.

For those who want to invest directly in international developed market stocks without risk management, direct substitutes include EFA and VEA, and IEFA is also worth comparing as a lower-cost way to gain international developed market exposure. The three products shown in the table, RODM, IDEQ and SEIE, differ in that they follow international multifactor, dynamic and select strategies respectively, and are managed without volatility-based risk management. What sets this ETF apart is that it combines international equities with volatility-based risk management.

Here are the points to review before investing in SFTX. Volatility-based risk management is its appeal, but delayed participation in sharp rebounds, currency exposure and management fees should be checked in advance. It is also a good idea to compare it with general international equity products.

Delayed participation in sharp rebounds, currency fluctuations and the timeliness of volatility signals are the main variables for short-term performance, and a risk management strategy does not prevent all losses. With a large international allocation, currency and regional risks can also come into play.

It is a suitable candidate for medium-risk investors who want to invest in international stocks while reducing downside risk when market volatility rises. If you want to invest without risk management, consider products such as EFA or VEA, and if you want volatility-based risk management, it is advisable to compare this product alongside them before choosing.