2. Diversification. FM provides exposure to up to 20 countries, helping to mitigate the volatility associated with concentration risk.
3. A bias 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. We believe this level of scrutiny can be particularly important in underdeveloped markets where liquidity is key.
1 Bloomberg daily data from January 1, 2014 to October 31, 2014.
2Volatility measured by Bloomberg average 30 day rolling, from December 2010 to December 2013.
3 Source: MSCI monthly correlations from December 2010 to December 2013.
Heidi Richardson is a Global Investment Strategist at BlackRock, working with Chief Investment Strategist Russ Koesterich. She also leads the iThinking initiative for iShares. You can find more of her posts here.