iShares ETFs cover a broad range of asset classes, risk profiles and investment outcomes. To understand the appropriateness of this fund for your investment objective, please visit our product webpage.
Find out more about iShares Edge MSCI World Minimum Volatility ETF (WVOL)
https://www.blackrock.com/au/products/284667/
This product is likely to be appropriate for a consumer:
• who is seeking capital growth
• using the product for a major allocation of their portfolio or less
• with a minimum investment timeframe of 5 years, and
• with a medium to high risk/return profile
Key Takeaways
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Minimum Volatility investing seeks to reduce risk by investing in a portfolio of stocks that is less volatile than the broad market.
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Minimum Volatility investing has been around for decades and is backed by economic theory and real-world data.1
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Minimum Volatility strategies look at how stock prices change and interact with each other to build a portfolio that aims to have less risk than the broad market.
Why minimum volatility investing?
Imagine that you’re a hiker who has two potential paths to climb a mountain. One trail is very challenging. It’s steep, rocky, and has several parts where the path has sharp descents. While the trail is exhilarating, there is also the increased risk of injury or falling. Alternatively, there is a second trail that is more gradual and stable. While this trail may be less exciting, there is a much lower chance of getting injured or hurt.
In this analogy, a minimum volatility strategy would look more like the second trail — less risky and designed to be more stable. A min vol portfolio can help investors navigate the risks of big fluctuations in the market. Just as hikers can still reach the summit of the mountain on a less challenging trail, investors can still pursue their investment goals while seeking to avoid stomach churning volatility.
Min vol, like all our factor investing options, has a solid economic reason for its long history and has consistently reduced portfolio risk compared to the overall market. In fact, the MSCI World Minimum Volatility Index has had ~20% less volatility than the MSCI World Index since inception.2
Historically, studies have shown that less volatile stocks have outperformed more volatile ones over time.3 There are a few theories as to why – for example, institutional investors may overweight more volatile companies to capture more equity premium and reach their return targets.
Alternatively, there may be groups of investors that are willing to overpay for riskier and more volatile companies for potential high returns. This combination of factors has meant that less volatile stocks are often underappreciated.
Our approach to minimum volatility investing
iShares’ ETF methodology looks at individual stock volatility and correlations when evaluating a minimum volatility portfolio.4
Source: MSCI as of 30 June 2025. Stock volatility - Standard deviation describes the variation of a set of returns away from the average (mean) return. Correlations - Factors include macro factors (e.g., country, industry, etc.), style factors (e.g., value, quality, momentum, etc.), as well as individual stock specific risk.
Minimum volatility investing looks to build a portfolio with less risk than the broad market– not just a collection of less risky stocks.
Unlike the other factors we believe in at BlackRock, the main goal of minimum volatility is to reduce overall risk in portfolios. Investors can use minimum volatility ETFs such as the iShares MSCI World ex Australia Minimum Volatility ETF (WVOL) to help lower their overall level of risk and stay invested.
This means they can continue participating in equity rallies rather than pivoting to fixed income or cash.
Since inception in 2011, iShares Minimum Volatility ETFs have captured meaningful gains during upswings, and minimized losses during declines in U.S., international and emerging markets, shielding portfolios and allowing investors to stay invested through market cycles as per the table below.
Upside/downside capture vs broad market, 1/2003 – 9/2025
Source: BlackRock, Morningstar as of 30 September 2025. Analysis uses monthly returns of the following indexes (index inception date in parentheses): USA is represented by the MSCI USA Minimum Volatility Index vs. the S&P 500 Index; International Developed is represented by the MSCI EAFE Minimum Volatility Index vs. the MSCI EAFE Index; Emerging Markets is represented by the MSCI EM Minimum Volatility Index. Note data prior to indices’ inception in October 2011 is based on back testing. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance and simulated past performance is not a reliable indicator of future performance.
Minimum volatility in portfolios
The MSCI Minimum Volatility Indexes explicitly apply sector limits relative to the weights in their parent indexes at each rebalance.5 This constraint was purposely applied to help prevent unintended overweights to “safe haven” sectors. This sector-controlled approach makes minimum volatility attractive as a core position in a portfolio.
Source: MSCI as at 31 December 2025. Diversification and asset allocation may not fully protect you from market risk.
As seen in the chart above, minimum volatility tends to naturally overweight the utilities and consumer staples sectors, but the sector caps play an important role in helping min vol seek to capture more upside if equity markets rally.
A focus on factor styles, such as minimum volatility, has historically provided better returns and/or less risk. Sectors, on the other hand, are a source of unrewarded, active risk in portfolios.
A potential downside of minimum volatility strategies is that their defensive bias can lead to relative underperformance during strong, broad-based market rallies—particularly when higher-beta or more cyclical sectors outperform. Even with sector constraints in place, minimum volatility portfolios may still exhibit style tilts that differ meaningfully from the broad market, which can result in periods of tracking error and investor discomfort. As with any factor allocation, returns can be cyclical, and patience may be required to realize the long-term benefits.
ETFs can give easy access to minimum volatility investing
Asset allocation and staying fully invested in equity markets are often two key drivers of portfolio performance. But time and time again, even the most disciplined investors abandon their plan as volatility rises and markets sell off.
Accessing minimum volatility through a low-cost ETF such as the iShares MSCI World ex Australia Minimum Volatility ETF (WVOL), can help investors to mitigate risk and volatility in portfolios while sticking with their long-term plans and financial goals.
