If the risk level moves above the established target, the cash level is increased in order to maintain the target volatility.

 

 

Standard & Poor's is zeroing in on volatility levels in four indexes within its Emerging Market and Global Thematic Index Series, indexes that have turned in terrible performance amidst the market crisis.

The volatility targeting approach has been common in the structured products arena, but is new to the indexing world, S&P said in a statement. The risk control indexes work by setting a specific volatility target based on the historical volatility of an underlying index, and monitoring that level to make sure it remains constant.

If the risk level moves above the established target, the cash level is increased in order to maintain the target volatility. If the risk level moves below the threshold, the index will employ leverage to maintain the target volatility.

The risk

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Ever wonder why international markets perform differently from the U.S. (and each other)? Just look at the sectors.

People talk a lot about the interaction between the political economy of nation states and the performance of their markets. And it is certainly true that different countries are often at different points in the economic cycle. That's one of the reasons why diversifying overseas adds low-correlated returns to a portfolio.

But there's another reason for those differences: sectors. The sector breakdowns between regions and countries differ widely, and examining those breakdowns can help you understand why one market zigs while another market zags.

Of course, the tail wags the dog here: The sector breakdown is reflective of each region's economy, and vice versa. But sectors offer one easy way to gain insight into how and why one economy and market performs differently from another.

U.S. Vs. The Developed World

If you

...

Ever wonder why international markets perform differently from the U.S. (and each other)? Just look at the sectors.

People talk a lot about the interaction between the political economy of nation states and the performance of their markets. And it is certainly true that different countries are often at different points in the economic cycle. That's one of the reasons why diversifying overseas adds low-correlated returns to a portfolio.

But there's another reason for those differences: sectors. The sector breakdowns between regions and countries differ widely, and examining those breakdowns can help you understand why one market zigs while another market zags.

Of course, the tail wags the dog here: The sector breakdown is reflective of each region's economy, and vice versa. But sectors offer one easy way to gain insight into how and why one economy and market performs differently from another.

U.S. Vs. The Developed World

If you

...