Now, this is just one example of how index provider rules can affect exposure, but it illustrates the point that 2 indexes with similar names are not necessarily interchangeable. To be clear, I’m not saying that one index is “bad” and another is “good”, but rather that I simply believe that exposure matters. If an investor has decided to add frontier markets exposure to their portfolio, the ETF they select should reflect that. Likewise if the desired exposure is emerging markets, an ETF with frontier markets exposure would be less than precise.
So how do investors decide which index is right for them? For starters, you might check out the list of criteria for evaluating a benchmark index that my colleague Dodd Kittsley outlined in a recent blog post.
Del Stafford, CFA, is the iShares Head of Product & Investment Consulting.