Seeking Volatility Protection Using Indices

How broad is the range of passive protection against volatility?

  • Fluctuating periods of “risk-on” and “risk-off” mean that spikes in equity market volatility and large drawdowns are increasingly common in today’s economy (see Exhibit 1).
  • Passive investment strategies could help position portfolios to withstand market volatility.
  • S&P Dow Jones Indices (S&P DJI) offers a variety of indices specifically designed to help smooth out equity market drawdowns and improve risk-adjusted returns.
  • These indices can be broadly placed into three categories: defensive equity, multi-asset, and volatility.

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