Investors can hardly be blamed for being wary of the financial markets after the roller-coaster ride of the past few years.HSBC Bermuda has teamed up with Standard & Poor’s to come up with a new investment product that is claimed to remove some of the risk from investing in US stocks, while enhancing returns.That may sound too good to be true, but Aye Soe, who led the development of the S&P 500 Low Volatility Index on which the product is based, says there are hard data to support the claim.“The index offers investors exposure to the S&P 500 Index at much lower risk, we estimate between 25 percent and 30 percent lower,” Ms Soe, who is director at S&P Global Research and Design and was in Bermuda this week.“The basis is very simple. It works by taking the 100 least volatile stocks, measured by the standard deviation of price changes over one year, that is, the past 252 trading days.”Ms Soe said S&P researchers had found that over the long term, the S&P 500 Low Volatility Index had outperformed the S&P 500. In the short term, the approach has also proven successful.“If you look at the last year, the S&P 500 was flat,” Ms Soe said. “Over the same period, the Low Volatility Index returned 10.88 percent.”The concept is proving popular. Just a month after the Index was launched in April last year, the first exchange-traded fund (ETF) linked to it was formed. Today there are $1.3 billion in assets invested, linked to the Index.HSBC Bermuda is this month signing up investors for its product linked to the Low Volatility Index. The duration of the investment is six years. For all of that time, the principal is 100 percent protected. The closing date for investments is March 30.HSBC managing director of Wealth Management Sales, Chris Rosen, who is based in New York, said the simplicity of the strategy appealed to investors. There was no “black box”, he said, the investment was put on autopilot, not reliant on portfolio managers’ judgement calls.“From our perspective, there are a lot of investors who are reluctant to get back into the markets after the volatility of the past five years,” Mr Rosen said. “There’s a lot of money sitting on the sidelines looking to get back in.“This is a way to get back without taking substantial risk. People are looking to add yield to portfolios and this gives them an opportunity to get back into equities.”