Things That Make You Go Hmm…About Indexing

Source: www.msci.com
 

Past performance does not guarantee future results. Indexes are unmanaged baskets of securities in which investors cannot directly invest; they do not reflect the payment of advisory fees or other expenses associated with specific investments or the management of an actual portfolio.
 
International and emerging markets involve additional risks, including, but not limited to, currency fluctuation, political instability, foreign taxes, and different methods of accounting and financial reporting. As a result, they may not be suitable investment options for everyone. Emerging Markets represents securities in countries with developing economies and provide potentially high returns. Many Latin American, Eastern European and Asian countries are considered emerging markets.


 
March, 2014: MSCI’s China A-share Index (MSCI China A International Index) Hovers Around $28001
 
At the time of the above headline, index provider MSCI announced a roadmap to add China A-share to its Emerging Markets Index in 2015.2 I personally recall this announcement being a big deal! Why? Well, the Chinese A-share marketplace is notorious for discriminatory quotas against foreign investors, among other detractors.
 
This was a significant decision for a $1.7 trillion index as it implied that roughly $22 billion would be invested in China by fund managers based on the new, estimated 1.3% index weight to China A-shares.3 Continue reading