Edhec-Risk Institute warns of alternative index drawdowns

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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 strate

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