More Markets Added To Dow Jones Wilshire Indexes

January 17, 2008

Bahrain, Kuwait and Sri Lanka join Dow Jones Wilshire Global Index family's emerging markets lineup.

No doubt driven at least in part by the new attention focused on emerging markets, Dow Jones Indexes and Wilshire Associates have announced that three new countries will be added to the Dow Jones Wilshire Global Index family.

Bahrain, Kuwait and Sri Lanka will be included in the global index series starting March 24, following the next index quarterly review. All three are classified as emerging markets. In addition to the creation of new individual country indexes, the change will affect the Jones Wilshire Global Total Market Index, Dow Jones Wilshire Global exUS Index and Dow Jones Wilshire Emerging Markets Index, which will now include the newly added markets. Bahrain and Kuwait will also be incorporated into the Dow Jones Wilshire Middle East & Africa Index, while Sri Lanka will enter the Dow Jones Wilshire Asia-Pacific Index. Dow Jones projects that the change will ultimately result in the addition of eight Bahraini, 69 Kuwaiti and 18 Sri Lankan companies to the Dow Jones Wilshire Global Total Market Index in March.

The additional countries bring the total number of countries covered by the Dow Jones Wilshire Global Index family to 61, and the total number of emerging markets to 33.

"As managers continue to extend their search for performance—especially in emerging markets—we're seeing more of these markets taking steps to foster a more desirable investment environment for foreign investors. Adding these countries recognizes both the investability of these markets and the increased interest of institutional and retail investors in these markets," said Wilshire Associates President Lawrence Davanzo, who also heads the company's investment management businesses.

The move brings Dow Jones Indexes more into line with the other index providers in terms of breadth of country coverage, although there's continued debate in the industry about where these belong in the index spectrum.

FTSE covers 24 developed markets (or it will, once Israel migrates to its developed family in June) and 22 emerging markets (also effective in June, when Hungary and Poland will be added to the indexes and Pakistan will be removed) for a total of 46 countries. It does not include any of the countries to be added by Dow Jones, but it has said it is looking into developing frontier indexes. It is the only other one of the major index providers who does not currently provide some sort coverage for those three markets.

MSCI has indexes for Kuwait, Bahrain and Sri Lanka, but they are classified within its frontier market index family, which includes 19 countries. MSCI also covers 23 developed markets and 25 emerging markets for a total all together of 67 countries.

S&P, meanwhile, covers 27 developed markets and 35 emerging markets; it also covers 22 frontier markets—84 in all. It groups Kuwait, Bahrain and Sri Lanka in its emerging markets index family, although not within the investable series.

Finally, Russell also includes all three of Dow Jones Wilshire's newly added countries in its global index family as emerging markets; Russell's global indexes cover 63 countries, with 37 classified as emerging markets.  

Some might be tempted to view the new additions as "keeping up with the Joneses," since the markets involved are so tiny. However, with investors becoming more serious about international investment, especially in emerging and frontier markets, the number of countries covered by an index family will likely become more of an issue. No one wants to miss the next hot country story—Vietnam, anyone?


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