Environmental indexes

Volatility is high, dividends are low and liquidity is problematic, so why create environment indexes, either in their own right or as underlyings for structured products? The answer is to keep pace with retail investors, who increasingly are better informed about and interested in the environment. Richard Jory reports

The choices open to investors when they look to the environment range from a dip into a commodity index that has little or no correlation to the broader equity markets, and indexes built either on companies dedicated to sustaining the environment or those that qualify as environmental by dint of the ethical style in which they conduct business.

The limitation comes in the form of the restricted stock universe, the consequent illiquidity and volatility of their stocks, and the actual appetite of