Answer

A calculated index uses prices that are computed for the purpose of creating the index, instead of the valuations contributed by asset managers or owners. EDHECinfra indices are calculated and follow a consistent and robust valuation methodology for all the assets in the index universe, thus eliminating all biases.

Some of the key advantages of calculated indices include:

  • Defined universe with appropriate representation of assets
  • Consistent modelling methodology over time which is calibrated to market trends
  • Clearly explain the valuation of all assets in the universe
  • Allow for sophisticated analysis

Things to consider

Calculated indices benefit from greater methodological transparency and consistency. They use prices that are model-driven i.e. average market prices that representative investors would tend to pay rather than what individual investors actually pay. In a highly illiquid and segmented market this can make a significant difference. 

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