NEW YORK (TheStreet) -- With much of Europe stuck in recession, investors have reason to be wary about international funds. More bad news from the eurozone could send markets reeling. But at a time when the outlook for the U.S. economy is uncertain, it is important to be globally diversified.
To limit the risk of foreign investments, consider low-volatility ETFs that have proven relatively resilient during downturns. Top choices include iShares MSCI EAFE Minimum Volatility Index (EFAV), iShares MSCI EAFE Growth Index (EFG), and PowerShares International Dividend Achievers Portfolio (PID).
A particularly steady performer is iShares MSCI EAFE Minimum Volatility. The ETF demonstrated its value in the second quarter of this year when concerns about the European crisis sank foreign stocks. During the period, the MSCI EAFE index -- a popular foreign benchmark -- dropped 7.1%, but the Minimum Volatility fund only declined 1.0%, according to Morningstar.
To control risk, the low-volatility portfolio includes steady stocks. The fund stays diversified by keeping sector and country weightings roughly in line with the MSCI EAFE universe.Holdings include such reliable performers as Nestle (NSRGY) and drug makers GlaxoSmithKline (GSK) and Roche Holding (RHHBY) . While the ETF is only one year old, the benchmark has been operating since 2002. The minimum volatility benchmark has excelled in downturns. When MSCI EAFE dropped 43.1% in 2008, the minimum volatility benchmark declined 27.3%. In 2011, the low-volatility index about broke even, while the EAFE benchmark declined 11.7%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV