Global index provider STOXX Limited has launched the STOXX+ Minimum Variance Index family.

The company says that the new index family utilizes the modern portfolio theory of Nobel laureate Harry Markowitz, which attempts to maximize portfolio expected return for any given amount of risk, to create a hypothetical, risk-optimized portfolio based on a variety of STOXX indices.

Portfolio construction tool and risk model vendor Axioma provides the fundamental factor model used to calculate the rebalancing portfolios.

“As the demand for low volatility investment strategies that reduce the risk of a portfolio and essentially improve its long term returns becomes increasingly stronger, STOXX, in collaboration with Axioma, launches its new suite of STOXX+ Minimum Variance Indices,” said Hartmut Graf, chief executive officer, STOXX Limited, in a statement. “The new index family will offer two different versions for each index: a constrained and an unconstrained one. The latter is a novelty as it provides a strategy index that is minimized for volatility, but not restricted to follow an underlying base index too closely.”

Ian Webster, Axioma’s managing director for Europe, the Middle East and Africa said in a statement that “Minimum variance strategies have excited a lot of academic and institutional interest. By combining the portfolio construction expertise and quality risk modelling of Axioma with the strengths of STOXX’s innovative, rulebook based indexing approach, we have been able to create indices that replicate these strategies with their robust risk adjusted returns.”

The STOXX+ Minimum Variance Indices are the first offering to be categorized under the STOXX+ brand.

The basis for each of the STOXX+ Minimum Variance Indices is one of STOXX’s broad regional or country indices. The objective of the new indices is to provide access to the respective markets by varying the weights of the stocks of the underlying broad indices in such a way that the overall portfolio of the new index has the lowest possible volatility.

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