S&P Introduces Risk-Controlled Versions of Popular Indexes

The S&P 500 Risk Control 10% Index and the S&P/ASX 200 Risk Control 15% Index track the return of a strategy, which adjusts the exposure to each underlying index to control the level of risk. An S&P announcement said the indexes are for investors looking to gain exposure to the U.S. and Australian markets while limiting their risk.

The S&P 500 Risk Control 10% Index targets a volatility level of 10% and the S&P/ASX 200 Risk Control 15% Index targets a volatility level of 15%. If the risk level reaches a threshold that is too high, the exposure to the index is decreased to maintain the target volatility, the S&P explained. If the risk level is too low, then the Index will employ leverage to maintain the targeted level of volatility.