Alternatively weighted risk premium indexes gain momentum

Index providers and fund managers who have tended to focus on performance are seeing demand from investors for strategy indexes that focus on risk

Playing it safe

As risky stocks continue to be scrutinised by investors, alternatively weighted risk premium indexes, designed to outperform market-capped indexes by investing in the least volatile stocks, have been attracting institutional investors.

In a white paper published by BNP Paribas Investment Partners (BNPP IP) in December 2011, Demystifying equity risk-based strategies, investors were urged to “to check carefully the correlation of their excess returns over the market-capped indexes, their overlap

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