The Traderszone Network

Published in TZ Latest News 9 June, 2015 by The TZ Newswire Staff

Why Adding China To The MSCI Indices Could Be A Disaster (In 1 Simple Chart)

Chinese stocks are around 4 times more volatile than the current MSCI World index… in other words, if asset allocators maintain current equity weightings then portfolio risks will soar (if China is added). But given that most risk budgets are fixed, rising volatility in the equity portion of portfolios (from adding China) will require rotation out of equities and into bonds (or lower vol assets) in order to maintain VaR limits.

 

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