FTSE and Standard & Poor's deploy risk controls

Index providers FTSE Group and Standard and Poor’s (S&P) have addressed demand from investors for ways to enhance their portfolios while managing risk by launching indexes with in-built risk controls.

The FTSE EDHEC-Risk Efficient Index Series uses the Sharpe Ratio – which measures the reward per unit of risk of an investment – to optimise risk-reward efficiency. It does this by ensuring an index is not weighted too heavily towards a particular sector.

The initial launch comprises indexes for de