According to a news release, the indexes are alternatively weighted to promote diversification across countries and industry sectors. They seek higher absolute and risk-adjusted returns compared to market cap-weighted indexes with less downside risk.
The FTSE DBI Index Series is made up of three indexes, including the:
- FTSE DBI Developed Index
- FTSE DBI Developed ex US Index
- FTSE DBI Developed ex Japan Index
The investment philosophy behind the FTSE DBI Index Series is that both geography and industry are the primary drivers of global equity risk and return; and that market sentiment can lead to momentum effects, causing concentration risk in market-cap weighted indexes, the news release said. A diversified portfolio helps to avoid this concentration risk and lessens downside risk.