The Axioma Worldwide Equity Linked Factor Risk Model (Linked Model) combines the Axioma United States Equity Model (AXUS4) with the Axioma Developed Markets ex-US (AXDMxUS4) and the Axioma Emerging Markets (AXEM4) Models into one interconnected equity model.
The Challenge for Global Asset Allocators
Global risk models offer the convenience of a single model, but they may also miss local factor nuances and key diversification benefits available between different markets that are important to understand total global equity risk, relative to a policy benchmark or in absolute terms. The only available alternative was to use several individual regional models to capture these nuances – impractical from a cost and efficiency perspective.
With full coverage of global markets but a regional factor structure that recognizes the differences in factor phenomena from one market to another, the model enables users to drill down within regional allocations to understand the factors driving portfolio performance and risk while simultaneously allowing aggregation of these allocated risks up to the total global equity allocation of the fund.
A Global Model with Regional Drill-Downs
Understand what’s driving the total plan equity allocation.