FTSE Group (“FTSE”) the global index provider, have created short and leveraged indices on the FTSE 100 and FTSE 250 indices. The new indices allow money managers to exploit the volatility in the UK market by allowing investors to go short the market or gear up. The indices will serve as the basis for ETFs, benchmarks and other index-linked financial products.
The new indices are an extension of FTSE’s range of Investment Strategy Indices that are designed to help clients develop strategic investment tools that provide them with alpha returns relative to a standard market cap weighted benchmark. These indices represent an active management strategy wrapped in an index with the advantages of passive management: high capacity, transparency and easy implementation.
Imogen Dillon Hatcher, Executive Director, FTSE Group, commented: “During times of market volatility like those experienced currently, market participants are demanding more sophisticated tools to hedge and manage their investments more effectively. The FTSE 100 and the FTSE 250 Short and Leverage Index series allow for the creation of financial instruments that enable leveraging and short exposure on the key UK equity benchmarks.”
The following indices have been created:
- FTSE 100 Short Index: with -1 leverage
- FTSE 250 Short Index: with -1 leverage
- FTSE 100 Leveraged Index: leveraged with x2 gearing
- FTSE 250 Leveraged Index: leveraged with x2 gearing
- FTSE 100 Super Leveraged Index: leveraged with x3 gearing
- FTSE 250 Super Leveraged Index: leveraged with x3 gearing
- FTSE 100 Ultra Leveraged Index: leveraged with x4 gearing
- FTSE 250 Ultra Leveraged Index: leveraged with x4 gearing
Both sets of indices take into account the geared returns and the interest income element of running the short position or the cost of financing the leveraged positions.
