UN-LIMIT THE TRUE POTENTIAL OF YOUR ASSET ALLOCATION

Strategic asset allocation aims to create an asset mix which provides an optimal balance between expected risk and return. Typically, the equity portion of this asset mix is split geographically to diversify the portfolio. The idea behind this is to decrease your dependence on the performance of one country or region.

However, in today's interconnected, global economy, many companies operate in regions and countries that are beyond their domicile. They also generate revenue in multiple regions. For example, components of the S&P 500 derive more than one third of their revenue from non-US markets.

The economic exposure of global companies directly influences their performance, and thus, impacts your investments. The traditional equity benchmarks do not, however, factor in these interdependencies. Thus, the equity portion of a strategic asset allocation portfolio which is built using traditional indices will show the revenue overlap of these benchmarks.

This ultimately means that investing in different regional indices that select companies merely according to their domicile and primary listing does not necessarily provide the desired diversification for your portfolio.

CONSTRUCTING MORE EFFICIENT PORTFOLIOS

 

For a strategic asset allocation based on truly separated geographic buckets that provide significantly less correlated returns, real diversification, and consequently more efficient portfolios, STOXX has created an investment solution.

The STOXX True Exposure™ Indices (STOXX TRU™) provide smart-beta solutions that allow investments in predefined countries or regions by selecting companies that have a dominant economic exposure to the targeted area. By enabling investors to sharpen portfolio exposure to selected regions, these indices allow for improved asset allocation that significantly de-risks portfolios with the same regional allocations.

Our unique methodology uses an innovative model which identifies the diverse geographic revenue streams of companies, and consequently disentangles the economic overlaps. STOXX TRU™ provides transparency for investors, allowing them to minimize overlaps in their portfolios and increase their allocation to a specific region.

The basic index universe for the STOXX TRU™ index family is the respective STOXX country, broad or benchmark index. The initial offering is composed of five country indices (Australia, Canada, Japan, UK and USA), four regional indices (Eurozone, Europe, Asia/Pacific and North America) as well as four global indices (Developed Markets, Developed Markets ex Europe, Developed Markets ex USA and Emerging Markets).

Indices are available with exposures ranging from 25% to 100%, to cater to different investors' needs and strike the desired balance between exposure to the target region and market cap coverage.

Now you can un-limit the true potential of your asset allocation with STOXX TRU™. 

To learn more, please view the material on the right and contact us at stoxx@stoxx.com.