Barclays Capital has launched Dynamic Gems index family, comprising the Barclays Capital Dynamic Long/Neutral Global Emerging Markets Index and the Barclays Capital Dynamic Long/Short Global Emerging Markets Index.
The emerging market currency indices have been designed as underlyings for investment products and to enhance the risk/return profile of institutional investors' emerging markets investments. Emerging market currency returns were significantly positive from 2001-2010, but have also been characterised by sharp temporary declines during high risk global market events. The new indices should reduce the negative impact of such events.
Jose Mazoy, Barclays Capital's director of index portfolio and risk solutions, said the indices are interesting, because of the historical negative correlation displayed by emerging market currencies and their volatilities, especially during times such as the financial crisis of 2008. "The Dynamic Gems Indices' goal is to enhance the risk/return profile of traditional emerging markets currencies, using volatility as an indicator of high- versus low-risk environments," he said.