The need for a global equity benchmark
The US equity market remains the largest and most influential market across the globe to date. Among the largest equity exchange-traded funds (ETFs) ranked by assets undermanagement (AUM), the largest are still dominated by US funds, be they narrow or broad based, pure market cap or style. As we move down the list, international equity funds start to appear, such as developed market (including or ex-US) and emerging market funds. The international equity markets enrich the opportunity set of the US market by providing the potential for diversification. Riding on the popularity of passive investment, index coverage on global equity markets has substantially increased. A global equity index can serve as the benchmark for ETFs, index funds or structured products, and also supplies reference points for global asset allocation and rich information for measuring the global economy. For an index provider, besides the benefit of a flagship product, a global equity index also acts as the selection universe and performance benchmark for derived indexes, such as style, risk-weighted ,factor-based, sustainable investment, optimized, etc. Clients would not be able to benefit from these investment strategies if the underlying index for the markets of interest is not in place. All these call for a definitive global equity benchmark.
In this paper, we cover:
