EFAV delivers a popular low-volatility take on international equities. The fund shows low market risk to our benchmark (measured by beta), and its portfolio biases toward defensive sectors are consistent with its low-volatility aims. The underlying index is constructed from the MSCI EAFE Index a rules-based methodology to security eligibility, sector and country exposure. A multi-factor risk model is used to weight securities for low volatility. The portfolio is further refined using an optimizer based on projected riskiness of securities aiming to deliver lowest absolute volatility. Like other EAFE-based products it excludes US and Canada, but in all, EFAV provides a viable vehicle for low-volatility developed international exposure.
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