In comparison, the FTSE Emerging Index’s top country allocations include China 16.7%, Brazil 16.1%, Taiwan 13.2%, South Africa 10.6% and India 9.6%. The MSCI Emerging Markets Index’s top country weightings include China 17.4%, South Korea 15.6%, Brazil 12.6%, Taiwan 11.1% and South Africa 7.9%. South Korea is the key difference between the two indices in terms of country allocations – FTSE counts South Korea as a “developed market” and does not include the country in its emerging markets index. Additionally, both indices have a heavy emphasis on the financials sector. [Vanguard Index Switch Sets Emerging Market ETF Showdown]
“In the last decade, conventional benchmarks ahve been increasingly used as substitutes for portfolios,” Marten Hoekstra, CEO of Emerging Global Advisors, said in the press release. “A consequence of this in portfolios is industry concentrations that are a legacy of the historical maturation of emerging markets. We believe investors continue to respect the value of these indices as benchmarks, but in their own portfolios prefer to have a more diversified approach.”
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Max Chen contributed to this article.