Index funds continue to be one of the most widely popular investment vehicles on the market today. This is driven by their ability to offer investors attractive returns, high levels of diversification, reduced risk levels and low overall management costs. While market appetites for these products in their current form remain high, sustainability-focused investor preferences and impending ESG regulations mean that the index space must evolve as well.
To facilitate this move, swissQuant is launching its latest generation of index construction technology, which introduces Preference-Driven Optimisation. With this technology, swissQuant can create and manage indices based on complex sets of preferences, such as: risk minimisation, yield enhancement, index tracking, and ESG optimisation.
Go Green Without Sacrificing Performance
swissQuant’s index construction technology enables the construction of specialised indices, including those that replicate both the performance of existing market-leading indices and their choice of underlying investments, while controlling for total ecological impact.
The example below is a backtest of an index built to track the S&P 500 with the same underlyings but optimised to lower C02 emissions and overall impact on global warming.
The ‘Green’ S&P 500 is just one potential application of swissQuant’s index construction technology. Index providers as well as banks and asset managers that provide direct indexing to their clients will now be empowered to offer dynamic new index products that satisfy an increasingly demanding investor audience.