3. It is biased towards liquidity. Its index is a subset of roughly 100 of the largest and most liquid stocks of its broader parent index. Individual stocks are selected using a special process that focuses on trading volume and shares available. This level of scrutiny is particularly important in underdeveloped markets where liquidity is key.
The inclusion of some of the world’s youngest demographics, coupled with considerable growth opportunities, FM provides investors with access to a virtually untapped market.
*Source: MSCI monthly correlations from December 2010 to December 2013. Volatility measured by Bloomberg average 30 day rolling, from December 2010 to December 2013.
Heidi Richardson is a Global Investment Strategist at BlackRock, working with Chief Investment Strategist Russ Koesterich. You can find more of her posts here.