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Investors dissatisfied with stock market indices they use as benchmarks, says EDHEC survey

Investors dissatisfied with stock market indices they use as benchmarks, says EDHEC survey

Investors and managers are dissatisfied with the stock market indices they use as benchmarks according to a new survey by EDHEC. The survey - Reactions to the EDHEC Study 'Assessing the Quality of Stock Market Indices' - was conducted by Felix Goltz and Guang Feng of the EDHEC Risk and Asset Management Research Centre. 

The investors surveyed all agree that they need a benchmark, but are dissatisfied with equity indices. A majority of them share EDHEC's opinion on the poor quality of cap-weighted indices in terms of inefficiency and the instability of their exposure to risk factors.

Customised indices made up of a combination of sector or geographical indices are investors' favoured solution for constructing their benchmark, but equal-weighted and fundamental indices have made ground.

According to the survey, more than 80% of investors and managers plan to change their benchmark now or in the near future.


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