New Russell Indexes Target Institutional Investors
Russell Investments has launched a new global benchmark specifically aimed at institutional investors that meets a growing demand for broader exposure to investable companies around the world.
The Russell World Cap Index tracks U.S. equities from all capitalization tiers and global large-cap stocks by combining the U.S. broad-market Russell 3000 Index and the Russell Global ex-U.S. Large Cap Index into one.
The new benchmark currently comprises more than 5,100 securities and about 93 percent of the Russell Global Index. Russell said in a press release that the launch underscores its focus on consultants and pension plan sponsors in its index business. According to Russell, the index mimics the strategies of institutional investors who include small-cap stocks in their domestic portfolios but focus on large-cap stocks in their international portfolios.
S&P Launches CDS Sovereign Indexes
Standard & Poor’s launched two credit default swap indexes for sovereign entities designed to track a big part of the over-the-counter credit derivative contracts market.
The S&P International Developed Nation Sovereign CDS Index has similar country constituents and weightings as the S&P/Citigroup International Treasury Bond (ex U.S.) Index, according to S&P. Meanwhile, the S&P Eurozone Developed Nation Sovereign CDS Index provides about the same country constituents and weightings as the S&P Eurozone Government Bond Index.
The country constituents and weights for each index are set at the inception of each index series, S&P said. On each rollover date, a new series will be launched with the current weights and constituents of the respective bond indexes. The new indexes have a 5 ¼-year maturity, as measured from the effective date.
Barclays Debuts EM Bond Index
Barclays Capital expanded its platform of government inflation-linked bond indexes in October with the launch of a more liquid version of its flagship inflation-linked emerging markets sovereign debt index.
The Emerging Markets Tradable Government Inflation-Linked Bond Index (EMTIL) is a subset of the company’s Emerging Markets Government Inflation-Linked Bond Index (EMGILB), the first comprehensive local-currency-issued government inflation-linked debt index from developing nations, which itself debuted in 2007.
The new benchmark strives to be more “tradable” than its parent by investing only in the most liquid bonds included in the larger index, with measures in place to ensure regional diversification, according to the company. EMTIL is a rule-based benchmark comprising the most liquid local-currency bonds from various emerging markets inflation-linked issuers included in the company’s flagship index. Among them, Brazil, Chile, Mexico, Poland, South Africa, South Korea and Turkey make the list. The index will be rebalanced annually.
Mexico Joins Citigroup Bond Index
Citigroup announced at the end of September that Mexico would officially join its World Government Bond Index, following a June announcement outlining Mexico’s eligibility.
Mexico’s fixed-income market met the requirements regarding size, credit and barriers to entry, with 19 Mexican government bonds—with a market value of $116.8 billion—initially eligible for inclusion in the index. Together those 19 bonds represented 0.65 percent of the WGBI’s total market value.
The newly added Mexican bonds are also included in the World Broad Investment-Grade (WorldBIG) Bond Index, of which the WGBI is a component, Citigroup said.
Russell Rolls Out Frontier Index Family
Russell Investments expanded into the far reaches of the developing world by launching a new series of indexes that focus on frontier markets. The family covers 41 countries that aren’t part of either its emerging markets or its developed country benchmarks.
The broad Russell Frontier Index is a float-adjusted market-capitalization-weighted benchmark that limits any one country weight in the mix to 15 percent in order to minimize single-country risk and distribute exposure in a more regional manner. It comprises 683 securities; the top countries in terms of weight are Argentina, Bahrain, Jordan, Kuwait and Qatar.
Other indexes in the series include the Russell Frontier Large Cap Index and Russell Frontier Small Cap Index. In addition, the company is launching a Russell Frontier ex-GCC Index, as well as a large-cap and a small-cap version of it, which excludes Bahrain, Kuwait, Oman and Qatar.