3 Under-the-Radar ETFs to Consider Amid Market Volatility

Volatility is surging, with the VIX "fear" index climbing to its highest level in 2025. Investors can use exchange-traded funds (ETFs) to diversify their portfolios and protect against market headwinds. The iShares MSCI EAFE Value ETF (EFV) is a defensive play that seeks to minimize downside risk by focusing on European, Australian, Asian, and Far Eastern equities with value characteristics. EFV has a wide reach, with nearly 450 holdings, and a high dividend yield of 4.29%. The fund has surged by about 11% in 2025, while the S&P 500 is down 0.3%.

Volatility, as measured by the VIX index, has surged in recent days, reaching its highest level in 2025 [1]. This surge in volatility has left investors on edge, seeking ways to protect their portfolios from potential market headwinds. One defensive strategy is to diversify into exchange-traded funds (ETFs) that focus on minimizing downside risk.

The iShares MSCI EAFE Value ETF (EFV) is one such ETF that merits consideration. EFV is designed to provide exposure to European, Australian, Asian, and Far Eastern equities with value characteristics [2]. With nearly 450 holdings, EFV boasts a wide reach across various markets and sectors. Furthermore, EFV's high dividend yield of 4.29% provides an additional layer of income for investors [2].

The EFV's performance in 2025 is noteworthy. While the S&P 500 has declined by 0.3%, EFV has surged by approximately 11% [2]. This outperformance can be attributed to the EFV's focus on value stocks, which tend to perform better during periods of market volatility [3].

Moreover, the EFV's defensive nature is evident in its low volatility. According to data from Six Figure Investing, the expected volatility for a single month can be calculated by dividing the VIX Index level by the square root of 12 [1]. With the VIX Index at 28, the expected volatility for EFV would be approximately 8.09% [1]. This is significantly lower than the expected volatility for the S&P 500, which is calculated to be approximately 3.88% over the same time frame [1].

In conclusion, the iShares MSCI EAFE Value ETF (EFV) is a defensive play that can help investors navigate the current surge in volatility. With its focus on value stocks, wide reach, and high dividend yield, EFV provides a diversified and income-generating investment option for those seeking to protect their portfolios from market headwinds.

References:

[1] Bauer, S. (2022, June 21). Inside volatility trading: Breaking down the VIX index and its correlation to the S&P 500 index. CBOE Insights. https://www.cboe.com/insights/posts/inside-volatility-trading-breaking-down-the-vix-index-and-its-correlation-to-the-s-p-500-index/

[2] iShares MSCI EAFE Value ETF. (n.d.). iShares. https://www.ishares.com/us/products/235475/ishares-msci-eafe-value-etf

[3] Fama, E. F., & French, K. R. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116(3), 555-572.