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It contrasts forecasting-based stock picking with a structuring approach that seeks excess returns without relying on forecasting. The framework builds from index exposure, adds leverage to capture ERP’s asymmetric payoff, and applies defensive and left-tail hedging to mitigate downside and improve risk-return across market conditions.",{"@graph":63,"@context":119},[64,80,102],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":51,"@type":70,"position":76},"https://docshare.wps.com/template/general/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/approaches-for-outperforming-an-index-equity-risk-premium-leveraging-with-risk-controls/562365/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/approaches-for-outperforming-an-index-equity-risk-premium-leveraging-with-risk-controls/562365.png","ImageObject",442,249,{"name":88,"@type":89},"AfterMidnight","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/pdf","2026-10-25","2026-10-12",true,{"@type":98,"interactionType":99,"userInteractionCount":101},"InteractionCounter",{"@type":100},"ViewAction",7,{"@type":103,"mainEntity":104},"FAQPage",[105,111,115],{"name":106,"@type":107,"acceptedAnswer":108},"What is the primary goal of the proposed strategy versus the S&P 500?","Question",{"text":109,"@type":110},"To enhance the S&P 500 through an innovative structuring approach that generates returns designed to outperform the index, especially when stock-picking forecasters have struggled over time.","Answer",{"name":112,"@type":107,"acceptedAnswer":113},"How does the framework attempt to capture the Equity Risk Premium (ERP)?",{"text":114,"@type":110},"It introduces limited leverage based on the structural belief that stock markets tend to outperform short-term interest rates over time, using ERP’s asymmetric payoff to drive excess returns.",{"name":116,"@type":107,"acceptedAnswer":117},"What risk controls are used to reduce downside during negative index periods?",{"text":118,"@type":110},"The solution adds defensive and left-tail risk hedging strategies so that, despite limited leverage, downside performance is mitigated and the risk-return profile is improved.","https://schema.org",{"og:url":78,"og:type":121,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":123,"canonical":78},"index,follow",{"doc_id":125,"site_id":56},562365,1792093269,{"code":4,"msg":5,"data":128},{"doc_id":125,"user_id":129,"nickname":88,"user_avatar":130,"doc_module":9,"category_id":50,"category_name":51,"doc_title":59,"doc_description":61,"doc_content":131,"file_id":132,"file_url":133,"file_type":134,"file_size":135,"view_count":101,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":101,"language":136,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":137,"faqs":138,"seo_title":139,"seo_description":61,"update_tm":140,"read_time":76},962090896061,"https://ap-avatar.wpscdn.com/davatar_9964176cb1d06d4a9deccf72a44ae3dc","Outperforming the S&P 500 index by leveraging the equity risk premium with risk controls  \nStructured Solutions Research  \nPierre Laramée, MMF, CFA, Executive Director and Portfolio Manager, Global Beta & Structured Solutions Patrick Thillou, Managing Director and Head, Trading and Beta Management  \nApproximate reading time : 15 minutes  \nApril 2025  \nSummary  \nThis paper is part of a series of Outcome Management publications that showcase CIBC Global Asset Management’s library of outcome-oriented investment solutions. It introduces our framework for enhanced equity indexing through an innovative structuring approach. Specifically, it highlights our proprietary solution applied to the S&P 500 index, along with its foundational building blocks. Our approach employs financial engineering and structuring capabilities to generate a stream of returns that outperforms the index, particularly in a market where stock-picking forecasters have struggled to add value over the years. Our solution incorporates a systematic degree of leverage to capitalize on the equity market’s asymmetric payoff, known as the Equity Risk Premium (ERP), while mitigating downside risk through defensive and left-tail risk hedging strategies.  \nThe Global Beta & Structured Solutions Team helps investors solve for their unique investment and implementation objectives. Drawing on a broad spectrum of financial instruments and engineering methods, our mission is to construct solutions that deliver specific outcomes. As a result, we facilitate a distinct approach to portfolio construction that helps investors maximize their probability of success across diverse market conditions.  \nStrategies for enhancing the returns of an equity index  \nIn the pursuit of surpassing benchmark indices, several approaches have emerged (Chart 1) .  \nThe most prevalent of these, categorized under a forecasting approach, includes fundamental, quantitative, and quantamental stock picking. These strategies rely on the ability to predict future market movements to capitalize on potential opportunities. While these solutions have yielded positive results in certain markets, they have frequently underperformed the S&P 500 index over the years.  \nIn contrast, we categorize a second group of methods under a structuring approach, which aims to outperform an index without depending on forecasting capabilities. This paper focuses on a structuring solution we have designed specifically to exceed the performance of the S&P 500 index.  \nAdditionally, the portable alpha approach typically combines a funded exposure—such as a passive or active indexing mandate—with overlay active solutions, which may encompass long-short stock picking, active foreign exchange (FX) management, and active global tactical asset allocation (GTAA) . The structuring approach discussed in this paper can also be integrated within a portable alpha framework. A particular aspect of the portable alpha approach is that its value addition process can be linked to another asset class. This category may also include solutions that achieve synthetic exposure to an equity index, such as through the use of futures contracts, while utilizing the available capital to fund an investment mandate, such as an active fixed income strategy—potentially a topic for future publications.  \nChart 1 – Approaches for outperforming an index.  \n\n| Enhanced Equity Beta\u003Cbr>(Approached to Outperform an Equity Index) |  |  |  |  |\n| --- | --- | --- | --- | --- |\n|  |  |  |  |  |\n| Forecasting Approach |  | Structuring Approach |  | Portable Alpha Approach |\n\nThe information was prepared by CIBC Global Asset Management  \nOutperforming the S&P 500 index with our proprietary structuring approach  \nOur objectives in developing the proposed solution are twofold. First, we aim to offer an innovative strategy for enhancing the S&P 500 index using a structuring approach in a market where stock-picking forecasters have often failed to add value over the years. Sec","cbCaii8EIITNymIZ","https://ap.wps.com/l/cbCaii8EIITNymIZ","pdf",809626,"English","# Summary\n# Strategies for enhancing the returns of an equity index\n## Forecasting approach\n## Structuring approach\n## Portable alpha approach\n# Outperforming the S&P 500 index with our proprietary structuring approach\n## Objectives\n## Enhanced equity beta building blocks\n# Our approach relies heavily on the existence of the ERP","[{\"question\":\"What is the primary goal of the proposed strategy versus the S\\u0026P 500?\",\"answer\":\"To enhance the S\\u0026P 500 through an innovative structuring approach that generates returns designed to outperform the index, especially when stock-picking forecasters have struggled over time.\"},{\"question\":\"How does the framework attempt to capture the Equity Risk Premium (ERP)?\",\"answer\":\"It introduces limited leverage based on the structural belief that stock markets tend to outperform short-term interest rates over time, using ERP’s asymmetric payoff to drive excess returns.\"},{\"question\":\"What risk controls are used to reduce downside during negative index periods?\",\"answer\":\"The solution adds defensive and left-tail risk hedging strategies so that, despite limited leverage, downside performance is mitigated and the risk-return profile is improved.\"}]","Approaches for Outperforming an Index - Equity Risk Premium Leveraging with Risk Controls | PDF",1791808448]