Busy Little Bees

September 13, 2006

S&P rolls out a gaggle of new indexes, including the first style benchmarks for emerging markets.

The Standard and Poor's Indexing Committee has been busy, busy, busy, rolling out one new index after another in an attempt to move into the hottest corners of the marketplace.

Style In Emerging Markets

The most important of the new indexes is probably the new emerging market style benchmarks, which S&P will unveil to the world on November 1.  S&P says these will be the first emerging markets style indexes to hit the market; in fact, it says that, until recently, emerging markets style indexes were not even possible, as data availability in the developing world precluded the launch of such focused indexes.

The value indexes in particular could be attractive to investors, as there is a great deal of concern in the markets about stretched valuations and a possible "bubble" in the emerging markets space.  Investors and index-fund-designers alike could well be interested in products that help avoid the excesses of any bubble by focusing down on value-tilted companies.

S&P is keeping the methodology for the indexes under wraps until November 1, saying only that it will use "multiple style variables" to divide stocks between growth and value.  It's unclear if it will apply the same nine-factor style methodology it uses for the familiar S&P/Citigroup "Style" benchmarks.

Step One For Vietnam

In other S&P news, the company said it would add Vietnam to its "Frontier Markets" index, a non-investable index of small, illiquid emerging markets that aren't ready for the prime time.  S&P calculates its "Frontier Markets" index on a weekly basis, but does not include it the components in its broader emerging markets index, as the countries are not "investable" in any real sense of the word.

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