FTSE International claims its new worldwide index – a competitor to the MSCI All-Country Index – will provide a more comprehensive global benchmark than ever before.
The new FTSE All-World Index (FTSEAWI), set to go live at the end of June, builds on the provider’s existing World Index, and fills in the global gaps with emerging markets data from investment bank ING Barings. The ING Barings data extends the index’s cover by 19 countries, bringing the total number of countries covered in the index to 49. Almost 2,600 stocks will be covered.
“International investors are increasingly looking to manage both their developed and emerging markets portfolios within a single benchmark structure,” according to Mark Makepeace, FTSE managing director. The FTSEAWI would allow them to manage their funds on a truly global basis, without the cost of running disparate portfolios linked to different indices.
The FTSEAWI brings together all their global benchmark indices together in a single series using its global classification system and incorporating the FTSE multinationals indices. The FTSEAWI would continue in its present form until September, when it would be replaced by two segments of the All-World Index – developed plus advanced emerging.
Data to be integrated from ING Barings is its emerging markets index. This is a family of indices covering 26 emerging stock markets, which has been calculated and maintained by the institution since 1992.
Investors will be able to customise the FTSEAWI using Global Pro, the index-tailoring service which supports the new index.
Endorsing the new index, Barclays Global Investors’ CEO Lindsay Tomlinson says the benchmark would let managers remove the double counting inherent in running global portfolios – emerging market indices which overlap with the current FTSEAWI are often used.
The current lack of consistency between indices used can cause many problems for fund managers when, for example, a country changes status from an emerging market to a developed market, says Graham Colbourne, a director of FTSE International: “A lot of fund managers and plan sponsors want an index which gives them the ability to invest in the whole world and is totally seamless.”
Although the FTSEAWI addresses investor concerns about the weighting within indices given to stocks with restricted free-float, some say the index’s four-level banding system to account for free-float is too crude. However, Colbourne counters that the system is aimed at reflecting only those changes to free-float that were material. And changes that were made were able to be made immediately.
Although the index is new, a history backdated to the end of 1993 will be made available, FTSE said. Rachel Fixsen