Further analysis by FTSE Russell through its global factor indexes shows that the upward trend for emerging markets during this time period has been influenced by five major market factors; momentum, size, quality, value and low volatility. In fact, the FTSE Emerging Comprehensive Factor Index, which measures emerging markets equities through these five factors, has returned 9.2% year-to-date.
Tom Goodwin, senior index research director at FTSE Russell:
“While the FTSE Emerging Index provides an effective high level snapshot of emerging markets performance, market participants who want a more nuanced view on an asset class might consider the FTSE Comprehensive Factor Indexes. The FTSE Emerging Comprehensive Factor Index is not a cap weighted index, but instead measures emerging markets securities by five specific market factors, using FTSE Russell’s ‘tilt-tilt” methodology to create a combined factor weight for each constituent within the index.”
Dodd Kittsley, Deutsche Asset Management:
“Investor demand and market sentiment for emerging markets has increased significantly over the past few months. In addition, investors have increasingly been adopting a factor approach to investing in markets through ETFs. The FTSE Emerging Comprehensive Factor Index brings these two trends together through the selection and weighting of emerging market stocks in an economically intuitive way based on years of cutting edge financial research.”
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Views expressed by Tom Goodwin and Dodd Kittsley of DEAM are as of April 26th and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the London Stock Exchange Group.
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