Bloomberg Indices announced the launch of the Bloomberg VolMax Indices, which aim to amplify upside potential, dynamically react to different market conditions and tactically reduce equity exposure during periods of volatility, all within a simple, rules-based framework.
Recognizing the importance of risk management while capturing upside growth for today’s markets, the Bloomberg VolMax Indices provide broad access to leveraged solutions that can enhance liquidity and potentially deliver amplified equity upside during favorable economic conditions. The Indices are a risk control version of well-known Bloomberg US Equity Indices that target a specific volatility level via adjusting the exposures of the Underlying Index and a Cash Component.
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The Bloomberg VolMax Indices apply a 40% volatility target to provide higher exposure to equities. To reach the target 40% volatility level, the Index dynamically adjusts equity exposure through leverage, up to a maximum of 500%. Because the index uses leverage, it also carries the inherent risks of leveraged strategies in down markets. To incorporate investment costs, an annual deduction factor is pro-rated daily and applied to the index performance, ensuring the index’s performance is transparent.
The Bloomberg VolMax Indices currently available includes:
- Bloomberg US Large Cap VolMax Index (BMAXUS)
- Bloomberg US Small Cap VolMax Index (BMAXSML)
- Bloomberg US Tech VolMax Index (BMAXTEQ)
The Indices’ rules-based approach to dynamic volatility management and methodology was developed by Bloomberg Indices in collaboration with RBC Capital Markets to optimize for trading and hedging activity. RBC will provide a variety of structured solutions that allow investors to access these indices for defined outcome opportunities, such as enhanced yield or growth.
Dave Gedeon, CEO of Bloomberg Index Services Limited, said: “Indexing continues to drive innovation and, more importantly, is helping enable broader access to new investment solutions. We’re proud to deliver the Bloomberg VolMax Indices through our collaboration with RBC Capital Markets and by leaning on RBC’s hedging and pricing optimization capabilities, provide these rules-based leveraged strategies through the index wrapper.”
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The Bloomberg Multi-Asset Indices are designed to provide broad measures of cross-asset market performance across the globe. These multi-asset benchmarks are comprised of Bloomberg Indices across major asset classes, with each index constructed as a composite of at least one fixed-income index and one equity index.
Bloomberg provides an independent, transparent approach to indexing for customers across the globe. Bloomberg clients can access the new indices on the Bloomberg Terminal at {IN STRAT <GO>} and all research and methodology for the indices are available on the Bloomberg Indices Documentation page.
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Source – PR Newswire
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