Russell Volatility Control Indexes
The Russell Volatility Control Indexes strike a balance between risk and return for each individual's risk tolerance by mimicking the returns of a targeted volatility investment strategy with a dynamic allocation between a risky asset and a risk-free asset.
The Volatility Control methodology can be applied to any Russell Index and is designed to limit risk during times of heightened volatility and allow maximum exposure to the market during periods of low volatility.
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Key features and benefits
Exposure and control.
The Russell Volatility Control Index methodology controls the index's risk level by dynamically adjusting the exposure to the underlying index or risky asset to achieve the index's target volatility.
Stability and downside protection.
- As realized volatility rises, the index shifts away from the underlying index and towards the cash investment.
- Similarly, as realized volatility falls, the index shifts away from the cash investment and the index's exposure to the underlying index increases.
These indexes provide a new way to limit the overall amount of risk in volatile and unpredictable markets. The index's algorithm detects the negative association between volatility and the movement of the underlying index offering downside protection and greater stability by adjusting the index's allocation to the underlying index at the onset of volatility.
Historically better risk-adjusted returns.
Per Russell Research, Volatility Control Indexes show better risk-adjusted returns over time than relevant market cap weighted indexes
Simple and cost-effective way to mimic a target volatility strategy.
By mimicking the performance of a complex volatility strategy, the indexes provide a streamlined tool for the implementation of a low or targeted volatility product.
Customizable and replicable.
Choices in target volatility, rebalancing frequencies, and leverage amounts allow the Volatility Control Indexes to be tailored to each client's needs. The Volatility Control methodology can be applied to any Russell Global or U.S. index.
With $3.9 trillion in assets worldwide benchmarked to its indexes and clients in more than 35 countries, Russell combines global experience with expertise in equity index construction and manager evaluation to create groundbreaking investment tools.
For more information, feel free to call a Russell representative or submit your question. We'll be happy to answer any questions you may have.
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Volatility Control Index data
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Indexes are unmanaged and cannot be invested in directly.