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Alternative Market Briefing

EDHEC-Risk North American index survey finds investors have some concerns

Tuesday, July 03, 2012

Beverly Chandler, Opalesque London: In its first EDHEC-Risk North American Index Survey of 139 investment professionals, including institutional investors, asset managers, private wealth managers, investment banks and brokerage firms, the EDHEC-Risk Institute has analysed the current uses of and opinions on stock, bond and volatility indices in the North American region.

The key findings of the survey included:

  • Size biases associated with cap-weighted indices are perceived as a very important issue by North American investors – nearly 100% of respondents see it as important to very important, in contrast to only 71% of European investors.
  • Cap-weighted indices – despite the fact that their shortcomings are widely acknowledged by respondents – are likely to remain the reference for equity portfolios for some time to come. Only a minority of respondents (23%) see alternative indices as a means of replacing cap-weighted indices. The majority see such indices as complements to cap-weighted indices or as replacement options for active managers (58.6% and 27.6%, respectively).
  • Investors have quite different objectives when it comes to different asset classes. Investors tend to resort to government bond indices as hedging tools for risk exposure (57% for government bond indices versus only 33.7% for corporate bond indices), while corporate bond indices are seen more as tools for achieving higher returns (33.7% for corporate bond indices and 25% for government bo......................

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