Investors are clamoring for more exchange traded products that go beyond traditional beta indexing methodologies, and to meet the growing demand, index providers are crafting new “smart-beta” indices.
For instance, STOXX Limited introduced the iSTOXX Global ESG Select 100 Index this week, according to a press release. The index was designed to act as an underlying benchmark for ETFs or other investable products.
The new index marries to popular long-term investment strategies: low-volatility stocks and dividend stocks.
“Part of the research done by STOXX centers around the low volatility anomaly, where low volatility companies have historically produced higher returns than high volatility companies, although the opposite would have been expected,” Hartmut Graf, chief executive officer, STOXX Limited, said in the press release. “Within this research, we have discovered that the historical performance of dividend indices can be significantly enhanced when adding screens for low volatility components.”