Edhec-Risk Institute warns of alternative index drawdowns

Edhec is reminding investors that alternative indexes can have significant drawdowns

Edhec warns on alternative indexes

The drawdowns of alternative indexes must not be ignored, though they may be better performers in the long term, according to the Edhec-Risk Institute. "No guarantee exists that in the short term these alternative weighting schemes always outperform cap weighting," states Edhec in its research paper, Diversifying the diversifiers and tracking error: outperforming cap-weighted indices with limited risk of underperformance, published in August.

The institute finds that "the worst performing