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FTSE launches short and leveraged indices

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Index provider FTSE Group has created short and leveraged indices on the FTSE 100 and FTSE 250 indices.

Index provider FTSE Group has created short and leveraged indices on the FTSE 100 and FTSE 250 indices.

The indices allow money managers to exploit the volatility in the UK market by allowing investors to go short the market or gear up.

The indices will serve as the basis for exchange traded funds, benchmarks and other index-linked financial products.

They are an extension of FTSE’s range of Investment Strategy Indices that are designed to help clients develop strategic investment tools that provide them with alpha returns relative to a standard market cap weighted benchmark.

Imogen Dillon Hatcher, executive director at FTSE Group, says: ‘During times of market volatility like those experienced currently, market participants are demanding more sophisticated tools to hedge and manage their investments more effectively.  The FTSE 100 and the FTSE 250 short and leverage index series allow for the creation of financial instruments that enable leveraging and short exposure on the key UK equity benchmarks.’
 
Both sets of indices take into account the geared returns and the interest income element of running the short position or the cost of financing the leveraged positions.

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