Ironically, the themes of recent issues of the Journal of Indexes paint a very active view of how our authors are thinking about the market.
Just to take two recent examples: In November 2009, on the cusp of a euro bust, it was “Death of the Dollar” (greatly exaggerated, as Mark Twain might say); in September 2008, just as the market was about to implode amidst a financial meltdown and massive investor risk reduction, we ran an issue titled “The Frontier in Focus.”
So what’s on everyone’s mind right now? Systemic risk, apparently. Should we therefore be long the market? Long VIX? Time will tell.
What I can tell you is that we’ve got some very solid submissions on the topic in this issue, and there are reasonable odds that the figurative trapeze artist on this issue’s cover will be able to hang on to that sumo wrestler using our authors’ guidance.
Leading off the issue is the weightily titled, “Applications of Systematic Indexes in the Investment Process” by Dimitris Melas and Xiaowei Kang. This article discusses indexes that use equity risk factors for index weighting to help mitigate portfolio risk. Next up along the same lines is an article by David Krein that discusses how certain indexes, including volatility indexes, are being used to help dampen risk. On the same theme, David Blitzer talks in this issue about the intersection of risk management and debt.
In the fixed-income space (where there’s been plenty of risk in recent years), Ramin Toloui asks whether it’s time to rethink bond indexes and takes a look at GDP-weighting. Then Jeremy Schwartz checks in with an interesting look at the widely varying approaches of various dividend-focused indexes. After that, Matthew Tucker and Stephen Laipply from BlackRock steer the theme back to bonds with an outstanding piece covering a very hot topic in our business these days—premiums and discounts in bond ETFs.
Rounding out the issue is a piece by Ronald Slivka and Xin Li discussing how newly permissioned derivatives in the Chinese market could revolutionize investing in that market. And the last page is blessed (or burdened, depending on your perspective) by a deft explanation from Lara Crigger of what the new Dodd-Frank financial regulation bill really means.
Hope you enjoy the issue, and … keep safe.
Jim Wiandt
Editor
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