FTSE Group and Emerging Portfolio Fund Research have launched an emerging market focused index – the FTSE EPFR EM Fund Flows Index.
The FTSE-EPFR index, a factor-adjusted version of the FTSE Emerging Index, is the first to overlay country flows data on top of a market cap weighted index.
Country flows data tracks investment allocation and flows in funds covering stock markets in developed and emerging countries.
The new index gives investors a clearer picture of how these factors are driving emerging markets. It aims to help improve portfolio performance by influencing an investor’s country weight adjustments.
Emerging markets constitute a growing fraction of investor portfolios and the new FTSE-EPFR index is aimed at improving country allocations within emerging market equity portfolios.
The fund flow data tracks the amount of cash flowing in and out of thousands of ETFs and mutual funds monitored by EPFR worldwide, while the country weights data tracks fund managers‚ portfolio allocations at month-end across various emerging markets. Combining these two data sets gives a timely measure of portfolio flows in and out of individual emerging markets. The index country weightings will be revised quarterly based on the country flows data.
EPFR tracks global flows into and out of emerging markets from the US, Europe and other regions.
“The new index will enable investors to further develop their interest in emerging markets,” says Mark Makepeace, chief executive of FTSE Group. “FTSE is pleased to work with EPFR Global in creating this timely and valuable addition to our range of investment strategy indices.”
Simon Ringrose, EPFR’s managing director, adds: “Fund flows are an important element in the investment process. Partnering with FTSE, EPFR Global is delighted to offer emerging market equity investors a tool to help improve country selection. The index was developed using FTSE’s internationally recognised robust index rules and methodology.”
