Solactive has launched an alternative low-beta equity index to enable investors to have a more defensive stance but maintain exposure to relevant long-term trends determined by the index provider.
The Solactive Next Generation Defensives index is comprised of stocks that benefit from a growing population, demographic developments and a growing wealth in emerging markets.
Solactive has launched the index in preparation for the potential rise in risk of stock market volatility as a result of elevated uncertainty and high valuations.
The index’s selection criteria involves focusing on non-durable consumer goods, utilities and healthcare. These three sectors had the lowest betas relative to the broad equity market between 2006 and 2020.
Additionally, the underlying stocks must have its revenue spread across the Americas, Europe, Africa and Asia-Pacific as well as have a growing revenue than its value three years prior.
The launch by Solactive follows the release of its future trends index series earlier this month.
Timo Pfeiffer (pictured), chief markets officer at Solactive, said in a statement: “Our Next Generation Defensives index is specifically targeted at investors seeking substantial long-term growth and, at the same time, want to increase their exposure in defensive sectors."