The potential of emerging markets (EM) is well understood, underpinned by superior growth and robust credit fundamentals. But with recent EM equity performance poor, developed market corporates could provide an attractive, alternative gateway to this potential. Stephen Cohen, Head of EMEA Investment Strategy at iShares, says: “The benefits of EM through developed markets are plenty: Some of the highest quality and most stable developed market companies have made great inroads into emerging economies. There will also be less political and foreign ownership risk, and better governance”.
‘ Russell Indexes ’
Global index provider Russell Indexes and IdealRatings, a provider of Islamic finance information, have introduced the Russell-IdealRatings Islamic Index Series, a new index series aimed at Islamic investors seeking benchmark solutions. The new equity indices provide Shariah-compliant exposure across global, global large cap, global small cap, developed, emerging markets, US large cap, BRIC large cap and global + GCC market segments.
Russell Indexes has downgraded Greece to emerging market status as part of its annual index reconstitution process. The decision by Russell results from a three-year market risk review process in which Greece did not meet macro- and operational risk criteria for developed market status, but did meet classification criteria for inclusion in emerging markets.
Leveraged exchange-traded funds (ETFs), which provide magnified exposure to various financial markets, have provided everyday investors with powerful hedging and speculative trading instruments that were once the reserve of institutional investors. These instruments typically provide two or three-times exposure – long or short – to a specific index tracking equities, bonds, commodities or currencies.
Stoxx, a leading index provider, has reached its 15th anniversary. Part of the Deutsche Börse and SIX, the Zurich-headquartered firm launched its first own-branded indices on 26 February, 1998, in advance of the introduction of the euro single currency the following year. In the ensuing 15 years, Stoxx has developed from being the leading euro-focused index provider to becoming a global firm known for a range of innovative strategy indices.
SSgA has announced the launch of the SPDR Russell 1000 Low Volatility ETF (LGLV) and the SPDR Russell 2000 Low Volatility ETF (SMLV) on the NYSE Arca. The exchange-traded funds (ETFs) are designed to provide investors with exposure to large-cap and small-cap US equities, respectively, with reduced risk. The funds are based on low-volatility versions of the widely followed Russell 1000 and Russell 2000 indices.
MSCI has extended its series of Economic Exposure Indices with the launch of 13 new indices measuring the performance of publicly listed companies with revenue exposures to an expanded range of target regions and countries. First launched in March 2012, the series initially included a range of developed market securities with high revenue exposures to emerging markets. This has now been expanded to include not only emerging markets but also Africa, China and Latin America.
S&P Dow Jones Indices has announced the launch of S&P GIVI Shariah Indices, the first Shariah-compliant indices combining low volatility and an alternative weighting scheme that weight’s a stock by its calculated intrinsic value, rather than by market capitalisation. The S&P GIVI is constructed from the S&P Global BMI universe, a comprehensive, rules-based global index covering some 10,000 companies in 46 countries.
Russell Indexes has introduced a new series of smart beta, low-volatility indices that expand on the provider’s current defensive index range. The new Russell High Efficiency Defensive Indexes combine various economic and market risk factors, creating a “stability score”, to identify high-quality, low-volatility stocks. The indices, which are based on existing index universes, are the first low-volatility benchmarks to offer low targeted tracking error to widely-followed Russell benchmarks.
MSCI, a leading provider of financial market indices, has introduced the MSCI Quality Indices, a series of smart beta equity indices designed to reflect the performance of a quality growth strategy. The alternatively-weighted indices identify quality growth companies as represented by high returns on equity, stable earnings that are uncorrelated with the broad business cycle, and strong balance sheets with low financial leverage.