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Foundations of Dedicated China Allocations: Part 3

Moving from the use of market-capitalization-weighted indexes for policy benchmarking and asset allocation to portfolio implementation, investors face considerations such as investability, capacity and liquidity, as well as ongoing exposure management and rebalancing. Index-linked investment vehicles based on market-capitalization-weighted indexes, such as ETFs, futures, options and over-the-counter swaps, can help investors carry out short-term tactical asset-allocation decisions and total-portfolio adjustments. In addition, active and alternative-weighted index strategies rely on market-capitalization indexes as the starting (or parent) universe.

Market-Capitalization-Weighted Indexes in the Investment process

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Research Authors

  • Zhen Wei - Managing Director, MSCI Research
  • Wei Xu - Vice President, MSCI Research
  • Shuo Xu - Vice President, MSCI Research