At the open of March 18, 2019, FTSE Russell’s semiannual rebalance of its flagship global equity indexes, the FTSE Global Equity Index Series (FTSE GEIS) and derived indexes, including the well- known FTSE All-World® Index, will take effect.
During this rules-based process, the entire index series—which includes over 16,000 large, mid, small, and micro cap securities from 49 developed and emerging countries—will be refreshed to reflect changes that have occurred to the global equity landscape since the last rebalance.
Adjustments scheduled to be made during the March 2019 semi-annual rebalance will include (but are not limited to):
Implementation of previously-announced country classification changes:
The first tranche out of five scheduled for Saudi Arabia’s reclassification as Secondary Emerging, which was announced in March 2018, will take effect this month, adding an expected 166 names to the FTSE Emerging Index.
As announced in September 2018, China A Shares will be classified as Secondary Emerging in June of this year. In advance of this event, at the March 2019 rebalance, China was reviewed as its own region—separate from the Asia Pacific ex Japan region—due to the size and impact that the mainland Chinese market would have on other companies in the Asia Pacific ex Japan region.
Adjustments to the market capitalization thresholds that determine the makeup of the large, mid, small, and micro cap segments of FTSE GEIS:
Leading up to each semiannual rebalance, FTSE Russell utilizes data as of the cutoff date—in this case, December 31, 2018—to calculate and make available to the public regional inclusion levels. A comparison of the inclusion levels scheduled to be applied as of March 18, 2019 to those applied during the last semi-annual rebalance (September 2018) indicate a downward shift in the size of the thresholds between the large and small cap market segments across all eight regional components of FTSE GEIS, with the exception of the Latin America and Middle East & Africa regions.
Latin America’s increased size threshold is attributable to Brazil’s recent performance (up 31.4% since the September 2018 review) and the fact that Brazil represents nearly 60% of the weight of FTSE GEIS’s Latin America regional component.
The introduction of Saudi Arabia to the Middle East & Africa region contributed to the increase in size of this region’s thresholds.
The semi-annual FTSE GEIS index rebalance is an important part of realigning the indexes to ensure that they continue to accurately reflect the global equity markets by implementing scheduled country classification changes and updates to index membership, market capitalization and float.
To learn more about FTSE Russell’s semi-annual review process, please join our post-review webinar on March 19 for a discussion about the global equity market landscape via a summary of trends observed and changes captured during the March 2019 global equity index review.
 Source: FTSE Russell, FTSE Brazil All Cap Total Return (USD) from September 24, 2019 through March 11, 2019
© 2019 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE Global Debt Capital Markets Inc. and FTSE Global Debt Capital Markets Limited (together, “FTSE Canada”), (4) MTSNext Limited (“MTSNext”), (5) Mergent, Inc. (“Mergent”), (6) FTSE Fixed Income LLC (“FTSE FI”) and (7) The Yield Book Inc (“YB”). All rights reserved.
FTSE Russell® is a trading name of FTSE, Russell, FTSE Canada, MTSNext, Mergent, FTSE FI, YB. “FTSE®”, “Russell®”, “FTSE Russell®”, “MTS®”, “FTSE4Good®”, “ICB®”, “Mergent®”, “The Yield Book®” and all other trademarks and service marks used herein (whether registered or unregistered) are trademarks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, FTSE Canada, Mergent, FTSE FI, YB. FTSE International Limited is authorised and regulated by the Financial Conduct Authority as a benchmark administrator.
All information is provided for information purposes only. All information and data contained in this publication is obtained by the LSE Group, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data is provided "as is" without warranty of any kind. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the accuracy, timeliness, completeness, merchantability of any information or of results to be obtained from the use of FTSE Russell indexes or research or the fitness or suitability of the FTSE Russell indexes or research for any particular purpose to which they might be put. Any representation of historical data accessible through FTSE Russell indexes or research is provided for information purposes only and is not a reliable indicator of future performance.
No responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this blog or links to this blog or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if any member of the LSE Group is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, such information.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing contained in this blog or accessible through FTSE Russell indexes or research, including statistical data and industry reports, should be taken as constituting financial or investment advice or a financial promotion.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group data requires a licence from FTSE, Russell, FTSE Canada, MTSNext, Mergent, FTSE FI, YB, and/or their respective licensors.