Indexing from Every Angle. The FTSE Advantage.
FTSE RIA BROCHURE
Indexing from Every Angle. The FTSE Advantage.
When financial markets move at warp speed, when local or global investment conditions suddenly change, when the very structure of the world economy shifts, how do investors and their advisors make sense of it all? How can you even keep track of the changes? Because if you don’t, how are you going to make the essential adjustments to asset allocations that capture the best results for your clients?
Indexing from Every Angle – the FTSE Advantage
Well-designed market indices will help you do just that
But indices do much more than measure and inform
That is because not all indices are created equal
They will measure the changes for you, give you a historical perspective on market movements, and enable you to compare one market with another, one region with another. And they will give you a benchmark against which to track your own investment performance.
When you are selecting an Exchange Traded Fund or passive investment fund to access these markets, nothing is more important than understanding the index on which it is based. The index defines and determines what the fund actually invests in – and the associated risk and performance you can expect. It is the heart and soul of a fund, determining what makes one fund different from another.
A truly effective index needs to comprehensively represent the market or asset group it is designed to reflect. It should be created according to objective criteria and rules, not the subjective judgments of a few individuals. And those criteria and rules should be entirely transparent and publicly available so that investors can know exactly how the index was created. Particularly in the area of emerging markets, moreover, countries must be accurately classified to reflect current economic and market realities so that they are not included in an inappropriate index, thus distorting its performance.
The purpose of an index – which is nothing more or less than a group of securities selected to track a particular market, asset class, industry or strategy – is to accurately reflect the risk/return profile of that group without necessarily owning every security which might qualify. The index is a representation of the market it is tracking. This allows investors to follow the market’s movements without having to track every single stock.
FTSE, for example, maintains a uniquely detailed four-tier classification system of developed, advanced emerging, secondary emerging and frontier markets; and it has acknowledged market realities in upgrading advanced economies such as South Korea from “emerging” to “developed”. This approach derives from FTSE’s practitioner driven governance system in which market participants join in the process of index creation. This ensures that FTSE indices accurately reflect current market conditions as experienced by investors themselves.
The beauty of an index is that it distills complex market behavior into one simple number. This is a wonderfully powerful tool enabling investors to see at a glance how a particular market or asset class is performing
1
2
3
An index, in fact, is only as good as its designers, which is why FTSE has the edge
FTSE is at the forefront of index innovation
The FTSE advantage is reassurance
FTSE gains global insight from its position as one of the world’s top three index providers. It creates indices covering all major asset classes in more than 70 countries around the world.
In a rapidly changing investment industry we are willing to listen and adapt. It was the first index provider to offer alternative indices and remains the leader in this field. It is ready with a new generation of China indices as well as new indices that capture the rapid growth of secondary emerging and frontier markets (Beyond BRICs). And it continues to innovate in areas such as fixed income and ESG where indexing is rapidly evolving.
Its indices are based on a wealth of local and global knowledge and insight, a responsiveness to change, and a proven ability to innovate to meet the needs of investors in a rapidly evolving world.
It is the global index market leader in areas as diverse as real estate, China, alternatively weighted indices, fixed income and foreign exchange. The FTSE Global Equity Index Series covers around 7,400 securities in 47 different countries and captures 98% of the world’s investable market capitalization. But FTSE also maintains long standing relationships with many markets around the world, giving it a deeper insight and expertise in local investment conditions. In China, for example, its track record is longer than any other index provider and its China A-50 index underlies VWO the biggest emerging market ETFs. FTSE provides the benchmark indices for many local stock exchanges and for ETF issuers such as CSOP, the first offshore operation to be set up by any Chinese fund management company. And unlike other large index providers, FTSE is not hidebound by its own way of doing things; it is nimble and responsive not only to changes in the global and local economies but to the requirements of its partners such as ETF providers and pension fund investors.
4
5
6
For further information, please contact Beijing +86 (10) 5833 2202 Dubai +971 4 375 1868 Hong Kong +852 2164 3333 London +44 (0) 20 7866 1810 Milan +39 02 3604 6953 Mumbai +91 22 6649 4180
New York Paris San Francisco Shanghai Sydney Tokyo
+1 888 747 FTSE (3873) +33 (0)1 53 768 289 +1 888 747 FTSE (3873) +86 (21) 6058 9131 +61 (0) 2 9293 2864 +81 (3) 3581 2811
© 2014 FTSE International Limited (“FTSE”). All rights reserved. “FTSE®” and “Footsie®” are trade marks of the London Stock Exchange Group companies and is used by FTSE under licence. “All-World”, “All-Share”, “All-Small” and “FTSE4Good” are trade marks of FTSE. Rights in each index vest in FTSE, the FTSE Licensors and/or FTSE’s relevant partners. Neither FTSE, the FTSE Licensors nor FTSE’s relevant partners makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the indices and/or the figure at which the said index stands at any particular time on any particular day or otherwise. Each Index is compiled and calculated by FTSE and/or its relevant partners. However, neither FTSE nor the FTSE Licensors nor FTSE’s relevant partners shall be liable (whether in negligence or otherwise) to any person for any error in any index and neither FTSE nor the FTSE Licensors nor FTSE’s relevant partners shall be under any obligation to advise any person of any error therein. The information and opinions contained in this document, which has been prepared by FTSE, are not intended to be a comprehensive study, nor to provide any advice, and should not be relied on or treated as a substitute for specific advice. All information is provided for information purposes only. No reliance may be placed for any purposes whatsoever on the information contained in this document or its completeness. No representation or warranty is given by FTSE or its partners, any of its directors, officers or employees as to the accuracy or completeness of the information or opinions contained in this document and no liability is accepted for any such information or opinions. While every effort is made to ensure that all information given by FTSE in this publication is accurate, no responsibility or liability can be accepted by FTSE and/or its relevant partners for any errors or for any loss arising from use of this publication. This document and its contents may not be reproduced, redistributed, stored in retrieval system, or passed on, directly or indirectly, to any other person or published, or transmitted by any other form or means whether electronic, mechanical, photocopying, recording or otherwise in whole or in part, for any purpose without the prior written consent of FTSE.
4
Indexing from Every Angle. The FTSE Advantage.
When financial markets move at warp speed, when local or global investment conditions suddenly change, when the very structure of the world economy shifts, how do investors and their advisors make sense of it all? How can you even keep track of the changes? Because if you don’t, how are you going to make the essential adjustments to asset allocations that capture the best results for your clients?
Indexing from Every Angle – the FTSE Advantage
Well-designed market indices will help you do just that
But indices do much more than measure and inform
That is because not all indices are created equal
They will measure the changes for you, give you a historical perspective on market movements, and enable you to compare one market with another, one region with another. And they will give you a benchmark against which to track your own investment performance.
When you are selecting an Exchange Traded Fund or passive investment fund to access these markets, nothing is more important than understanding the index on which it is based. The index defines and determines what the fund actually invests in – and the associated risk and performance you can expect. It is the heart and soul of a fund, determining what makes one fund different from another.
A truly effective index needs to comprehensively represent the market or asset group it is designed to reflect. It should be created according to objective criteria and rules, not the subjective judgments of a few individuals. And those criteria and rules should be entirely transparent and publicly available so that investors can know exactly how the index was created. Particularly in the area of emerging markets, moreover, countries must be accurately classified to reflect current economic and market realities so that they are not included in an inappropriate index, thus distorting its performance.
The purpose of an index – which is nothing more or less than a group of securities selected to track a particular market, asset class, industry or strategy – is to accurately reflect the risk/return profile of that group without necessarily owning every security which might qualify. The index is a representation of the market it is tracking. This allows investors to follow the market’s movements without having to track every single stock.
FTSE, for example, maintains a uniquely detailed four-tier classification system of developed, advanced emerging, secondary emerging and frontier markets; and it has acknowledged market realities in upgrading advanced economies such as South Korea from “emerging” to “developed”. This approach derives from FTSE’s practitioner driven governance system in which market participants join in the process of index creation. This ensures that FTSE indices accurately reflect current market conditions as experienced by investors themselves.
The beauty of an index is that it distills complex market behavior into one simple number. This is a wonderfully powerful tool enabling investors to see at a glance how a particular market or asset class is performing
1
2
3
An index, in fact, is only as good as its designers, which is why FTSE has the edge
FTSE is at the forefront of index innovation
The FTSE advantage is reassurance
FTSE gains global insight from its position as one of the world’s top three index providers. It creates indices covering all major asset classes in more than 70 countries around the world.
In a rapidly changing investment industry we are willing to listen and adapt. It was the first index provider to offer alternative indices and remains the leader in this field. It is ready with a new generation of China indices as well as new indices that capture the rapid growth of secondary emerging and frontier markets (Beyond BRICs). And it continues to innovate in areas such as fixed income and ESG where indexing is rapidly evolving.
Its indices are based on a wealth of local and global knowledge and insight, a responsiveness to change, and a proven ability to innovate to meet the needs of investors in a rapidly evolving world.
It is the global index market leader in areas as diverse as real estate, China, alternatively weighted indices, fixed income and foreign exchange. The FTSE Global Equity Index Series covers around 7,400 securities in 47 different countries and captures 98% of the world’s investable market capitalization. But FTSE also maintains long standing relationships with many markets around the world, giving it a deeper insight and expertise in local investment conditions. In China, for example, its track record is longer than any other index provider and its China A-50 index underlies VWO the biggest emerging market ETFs. FTSE provides the benchmark indices for many local stock exchanges and for ETF issuers such as CSOP, the first offshore operation to be set up by any Chinese fund management company. And unlike other large index providers, FTSE is not hidebound by its own way of doing things; it is nimble and responsive not only to changes in the global and local economies but to the requirements of its partners such as ETF providers and pension fund investors.
4
5
6
For further information, please contact Beijing +86 (10) 5833 2202 Dubai +971 4 375 1868 Hong Kong +852 2164 3333 London +44 (0) 20 7866 1810 Milan +39 02 3604 6953 Mumbai +91 22 6649 4180
New York Paris San Francisco Shanghai Sydney Tokyo
+1 888 747 FTSE (3873) +33 (0)1 53 768 289 +1 888 747 FTSE (3873) +86 (21) 6058 9131 +61 (0) 2 9293 2864 +81 (3) 3581 2811
© 2014 FTSE International Limited (“FTSE”). All rights reserved. “FTSE®” and “Footsie®” are trade marks of the London Stock Exchange Group companies and is used by FTSE under licence. “All-World”, “All-Share”, “All-Small” and “FTSE4Good” are trade marks of FTSE. Rights in each index vest in FTSE, the FTSE Licensors and/or FTSE’s relevant partners. Neither FTSE, the FTSE Licensors nor FTSE’s relevant partners makes any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the indices and/or the figure at which the said index stands at any particular time on any particular day or otherwise. Each Index is compiled and calculated by FTSE and/or its relevant partners. However, neither FTSE nor the FTSE Licensors nor FTSE’s relevant partners shall be liable (whether in negligence or otherwise) to any person for any error in any index and neither FTSE nor the FTSE Licensors nor FTSE’s relevant partners shall be under any obligation to advise any person of any error therein. The information and opinions contained in this document, which has been prepared by FTSE, are not intended to be a comprehensive study, nor to provide any advice, and should not be relied on or treated as a substitute for specific advice. All information is provided for information purposes only. No reliance may be placed for any purposes whatsoever on the information contained in this document or its completeness. No representation or warranty is given by FTSE or its partners, any of its directors, officers or employees as to the accuracy or completeness of the information or opinions contained in this document and no liability is accepted for any such information or opinions. While every effort is made to ensure that all information given by FTSE in this publication is accurate, no responsibility or liability can be accepted by FTSE and/or its relevant partners for any errors or for any loss arising from use of this publication. This document and its contents may not be reproduced, redistributed, stored in retrieval system, or passed on, directly or indirectly, to any other person or published, or transmitted by any other form or means whether electronic, mechanical, photocopying, recording or otherwise in whole or in part, for any purpose without the prior written consent of FTSE.
4
