EDHEC: How to Thrive in Asia’s Volatile Markets
| Dec 28th, 2011 | Filed under: Alpha Strategies, Today's Post | By: cfaille |
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A new study from the EDHEC Research Institute, “Structured Equity Investment Strategies for Long-Term Asian Investors,” looks at the control of volatility as an objective, from the point of view of institutional investors, and it concludes, especially on the basis of an empirical study of the Asian equity markets, that customized structured equity products that explicitly target a level of volatility can add value to portfolios.
About the Region
In the U.S., an institution looking to control the volatility of the securities in its portfolio would turn to the VIX or analogous indexes. In Asia, on the other, the volatility of the underlyings is so great that the supply of VIX-type products sparse, which is why it makes sense to create a pre-specified vol target as a specific feature within a structured equity product.
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Author Bio:
Christopher Faille is a Jamesian pragmatist. William James has taught him, for example, that "you can say of a line that it runs east, or you can say that it runs west, and the line per se accepts both descriptions without rebelling at the inconsistency."
