T3 Index has launched its E8 index, which measures the performance of the world’s eight largest emerging market exchange rates.
“The E8 Index fills a much needed gap in the market as investors increasingly want to capitalise on the opportunities presented by EM economies,” says John Bennett, general manager, global institutional sales & research at National Australia Bank.
Unlike existing benchmarks in this asset class, the E8 Index focuses exclusively on the largest 8 EM countries and invests in highly liquid three month FX forwards, which minimises the duration risk of the portfolio.
The eight emerging market currencies included in the E8 Index are the Chinese Yuan, the South Korean Won, the Indian Rupee, the Mexican Peso, the Brazilian Real, the Russian Ruble, the Turkish Lira and the South African Rand.
Annually the weightings of individual currencies are adjusted according to changes in FX turnover, GDP and trade statistics.
Simon Ho (pictured), CEO at T3 Index, says: “We are really excited about the E8 Index because it overcomes the many barriers to investing in emerging markets. This Index provides a simple, liquid and transparent way for global investors to gain exposure to the core eight EM countries in a single trade.”
This index is the first in a family of EM FX benchmark indices to be launched by T3 Index that will include regional sub-indices and volatility series over these benchmarks.