S-Network, an Alerian company, has launched the S-Network International BlackSwan Index (ISWNXT), which provides international exposure and the opportunity for capital appreciation while aiming to protect capital from the volatility of outlier events.
The new index is the second in S-Network’s BlackSwan Index series.
The S-Network BlackSwan Indexes have similar approaches but provide different exposures to meet investor needs. Both indexes minimise volatility through a 90 per cent allocation to US Treasuries and aim to provide capital appreciation in excess of inflation through exposure to long-dated, in-the-money call options that round out the portfolio.
The S-Network BlackSwan Core Index (SWANXT), launched November 2018, allocates to options on the SPDR S&P 500 ETF Trust (SPY) while the new S-Network International BlackSwan Index (ISWNXT) allocates to options on the iShares MSCI EAFE ETF (EFA), which tracks over 850 large- and mid-cap companies outside of the US and Canada. Through this approach, both indexes seek to mitigate the impacts of “black swan” market events on performance while still capturing equity upside.
“For investors, the spring of 2020 was a reminder of how quickly markets can take a turn for the worse. While the global pandemic was unique and unforeseen, the potential for events to expose investors to downside volatility with little to no notice remains a real risk,” says David LaValle, CEO of Alerian. “The downside protection of our BlackSwan series is designed to offer peace of mind to investors seeking equity exposure with less volatility.”
“The S-Network BlackSwan Index series illustrates our ability to create innovative and highly specialised indexes to meet marketplace demand,” adds Patrick Shaddow, head of index operations at S-Network. “The BlackSwan Index series offers a compelling solution to underpin investment products for investors with a cautious outlook or a desire for exposure with less volatility than a direct equity allocation.”