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Bailey McCann, Opalesque New York:

Compass Efficient Model Portfolios (EMP), a Tennessee-based investment firm has launched five new volatility-weighted indexes through Dow Jones Indexes, an additional four indexes are slated to launch in July. Compass EMP provides multi-asset funds to both institutional and retail investors. The indexes are different from other broad market exposure indexes in that they focus on risk attribution over more traditional capital weighting.

The five indexes are: CEMP Emerging Market 500 Volatility Weighted; CEMP International 500 Volatility Weighted; CEMP U.S. Large Cap 500 Volatility Weighted; CEMP U.S. REIT 100 Volatility Weighted; and CEMP U.S. Small Cap 500 Volatility Weighted.

Compass began calculating the indexes internally in 2003, relying on a patent-pending proprietary methodology. "Many fundamental weighted indexes weight the index based on who might pay the highest earnings or dividends," said Stephen M. Hammers, CIMA, chief investment officer of Compass EMP, in an interview with Opalesque. "Instead we apply a fundamental criteria and weighting the securities based on their risk contribution, and we have found that the performance of these indexes has been truer to broad market activity and the performance has been better."

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