Finvex has launched the Finvex Quality Efficient Asia Index. The index, which has been live since June 2017, is the second Asian index created by Finvex in recent months. Earlier this year the Brussels based consultancy developed the Finvex Sustainable Efficient Japan Index, which went live in May.
The Finvex Quality Efficient Asia Index, which is equally weighted and calculated in US dollar, is designed to reflect the performance of a dynamic portfolio of 60 equity securities listed on various Asian exchanges. Measured between January 2, 2006 and June 30, 2017, the index outperforms its benchmark, the MSCI AC Asia Pacific ex Japan, with a higher annualised return (8.42%, rebalancing costs included, against 7.36% with no cost) and lower annualised volatility (15.48% against 20.96%), a recurring theme for Finvex indices which tend to be less risky and have lower volatility than traditional benchmarks, according to Alain Flas (pictured), CEO, Finvex.
"This is exactly where we are convinced that Finvex adds value for the end-investors," said Flas, who joined Finvex from ING in June. "We offer investment solutions reducing risks but not at the cost of the performance." Finvex has always invested massive amounts in research (including a partnership with Vrije Universiteit Brussel - VUB) and innovation to develop and improve its models, according to Flas. "That is our DNA and our indices are indeed showing consistent risk reduction and enhanced stability that tends to lead to better compounding of returns. We focus on reducing extreme risk and volatility on each stock which is very powerful."
The Finvex Quality Efficient Asia Index, whose constituents include stocks from 10 countries (Australia, China/Hong Kong, Indonesia, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand and The Philipinnes), can be classified as a sustainable index, but not to the extent of other Finvex indices, where "we introduce sustainability within our quality factor", according to Flas. "We did not want to constraint too much our universe as sustainability data is not as wide in Asia as in Europe," said Flas.
The launch of the Finvex Quality Efficient Asia and the Finvex Sustainable Efficient Japan follow requests from different clients both in Europe and Asia, according to Flas. "We have separated Japan from the rest of Asia because we wanted to offer a dedicated solution and focus to Japan," said Flas who agreed that the Japanese market behaves very different from the Asian market. "These two markets are usually looked at separately by investors which explains the two different solutions offered by Finvex."
Finvex indices are often used as underlying for structured products, with the company's flagship Finvex Sustainable Efficient Europe 30 linked to close to 100 structures, according to SRP data, and the Asia index will not be any different, according to Flas. "There will be indeed structured products or delta one certificates linked to the index," said Flas.
"Our main target of investors is in Asia but we see some interest from European investors to diversify their equity exposure to this region as well," said Flas.
Nine structured products linked to Finvex indices have strike dates in 2017, according to SRP data. Of these, eight are linked to the Finvex Ethical & Efficient Europe 30, including five products available to retail investors in both Austria and Germany. The index is also used as underlying by Alexandria in Finland (in combination with the Markit iTraxx Europe Crossover S27) and APS Bank in Malta, while in Belgium, the Finvex Ecofi SRI Europe PR Index is used by Nagelmackers for the Codeis Securities Ecofi SRI Note.
Click the link to view the Finvex performance report.
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