Standard & Poor’s has launched risk controlled versions the S&P 500 and S&P/ASX 200 indices for investors looking to gain exposure to the US and Australian markets while lim
Standard & Poor’s has launched risk controlled versions the S&P 500 and S&P/ASX 200 indices for investors looking to gain exposure to the US and Australian markets while limiting their risk.
The S&P 500 Risk Control 10% Index and the S&P/ASX 200 Risk Control 15% Index track the return of a strategy which adjusts the exposure to each underlying index in order to control the level of risk.
The S&P 500 Risk Control 10% Index targets a volatility level of 10% and the S&P/ASX 200 Risk Control 15% Index targets a volatility level of 15%. If the risk level reaches a threshold that is too high, the exposure to the Index is decreased in order to maintain the target volatility. If the risk level is too low, then the Index will employ leverage to maintain the targeted level of volatility.
"At a time of heightened volatility in the world’s financial markets, Standard & Poor’s new US and Australian based risk control indices will help investors target and control the level of risk in the S&P 500 and S&P/ASX 200 respectively," says Steve Goldin, vice president of strategy indices at Standard & Poor’s Index Services. "With risk controlled indices already based upon the S&P BRIC 40 Index, S&P Latin America 40 Index, S&P South East Asia 40 Index, and S&P Global Infrastructure Index, Standard & Poor’s is the only index provider to offer indices targeting specific volatility levels."
