RBS takes balanced approach in sector-weighted index launches
Royal Bank of Scotland (RBS) has launched a series of indexes weighted by sector rather than market capitalisation. The indexes are designed to remove cyclical risk from stock market exposure. Market capitalisation-weighted indexes can become skewed towards particular sectors, leaving investors heavily exposed to any subsequent crash.
The UK Balanced Sector Base Index addresses this by fixing a weight of 12.5% to eight defined economic sectors. Each sector contains between six and 10 equally
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