GLOBAL - Russell Investments has launched the Russell Stability Indexes which divide securities according to volatility and quality.
The indices are split into two - the "Defensive" index which is considered more stable, and the "Dynamic". The stocks of defensive companies tend to outperform those in the dynamic index during weak market environments. Dynamic companies have greater exposure to certain risks, but their stock prices tend to increase faster during periods of rapidly rising stock prices, said the firm. The indices are designed to serve both active and passive investment managers and are characterised by low turnover and high transparency.
Russell Investments director of index research Rolf Agather said: "We detected a need to extend the Russell Indexes' style set as clients and investors seek indexes that, while independent from other definitions of style, are still cap-weighted and encompass the overall investible market. The Russell Stability Indexes offer investment professionals additional style investing tools that reflect market volatility as well as current economic and credit cycles.
"Russell's focus on investment manager research and capital market analysis has led to a growing awareness of the importance of stability variables in explaining market behaviour and investment manager returns. Introducing this third dimension of style effectively turns the traditional two-dimensional style box that considers market cap and growth/value designations into a three-dimensional cube that can help to better explain performance differences among equity managers, especially at critical points in the market."
This week's edition of Professional Pensions is out now.
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Removing liquidity restrictions would enable DC funds to capitalise on the potentially higher and safer returns that DB schemes have benefitted from, says Patrick Marshall.