Nasdaq OMX, the company behind the No. 2 U.S. stock exchange and
a big and growing indexing business, plans later this month to
launch a risk-weighted version of its popular Nasdaq-100 Index,
which is the basis for the nearly-$35 billion PowerShares QQQ Trust
The company's email communique about the May 23 launch was light
on details, but did say that the Nasdaq-100 Indexcellent 80 Index
will hedge risk by reducing participation in the Nasdaq-100 when
the index loses value. It noted that it will make use of the
patent-pending methodology of Indexcellent, LLC to "apply
protection for 80 percent of the high water index level."
This launch comes less than a month after S&P Dow Jones
Indices announced the S&P GSCI Risk Weight Index. The launches
speak to a broader focus in the world of indexes and
on enhanced beta-type screens that attempt to protect returns or
deliver better returns than first-generation
The Nasdaq-100 comprises the 100 largest (by market-cap),
nonfinancial securities from the Nasdaq exchange, and the
Nasdaq-100 Indexcellent 80 Index will invoke the index provider's
patent-pending "Indexcellent" methodology to create exposure to the
Nasdaq-100 stocks while hedging against volatility.
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