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S&P Indices launches Dynamic Rebalancing Risk Control Index Series


S&P Indices has launched the S&P Dynamic Rebalancing Risk Control Index Series, a collection of indices that seeks to provide greater stability and control over the level of risk typically associated with the underlying index. The new indices reflect leading S&P headline indices while offering investors an efficient, cost effective means of controlling risk by targeting a specific level of volatility. 

The S&P Dynamic Rebalancing Risk Control Index Series currently includes the following indices: S&P 500 Dynamic Rebalancing Risk Control Index; S&P SmallCap 600 Dynamic Rebalancing Risk Control Index; S&P Composite 1500 Dynamic Rebalancing Risk Control Index; and S&P Latin America 40 Dynamic Rebalancing Risk Control Index.
Direxion, a leading provider of liquid alternative investment solutions, has been licensed by S&P Indices to launch exchange traded funds based upon the four indices.
“By integrating a volatility control measure, the S&P Dynamic Rebalancing Risk Control Index Series provides a new level of innovation for investors looking to gain exposure to developed and emerging markets while controlling the level of risk typically associated with investing in these markets,” says Alka Banerjee (pictured), Vice President at S&P Indices.
“We are excited about strengthening our relationship with S&P Indices as we bring rules-based ETFs to the marketplace that use volatility to determine underlying equity exposure,” says Edward Egilinsky, Direxion’s Head of Alternatives. “The financial community continues to seek ways to mitigate risk when investing in equities. These ‘buy and hold’ strategies are designed to capture upside market movements, while at the same time looking to minimize the overall downside risk associated with equity investing.” 
The S&P Dynamic Rebalancing Risk Control indices are designed with the goal of supporting investment products such as index funds, index portfolios, and index futures and options. Similar to the S&P Risk Control Indices, the S&P Dynamic Rebalancing Risk Control indices consist of a position in an underlying index and a position in 90-day T-bills. If the volatility level reaches beyond the desired threshold, the T-bill position is increased to maintain the target volatility. The Indices have the flexibility to make weighting adjustments on a daily basis; however, the exposure of T-bills and underlying index components are rebalanced at a minimum on a monthly basis.

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