SEATTLE--()--Russell Investments today introduces the Russell Geographic Exposure (“GeoExposure”) Index Series in response to increasingly integrated global markets. A new methodology identifies developed global companies with significant exposure to targeted geographic regions or countries. The resulting indexes provide clients exposure to emerging markets through an index of developed market companies.
“Where a company is headquartered is no longer the primary factor in how it makes money. Many of today’s large multinational corporations have diverse geographic revenue streams”
"Where a company is headquartered is no longer the primary factor in how it makes money. Many of today’s large multinational corporations have diverse geographic revenue streams,” said Tom Goodwin, Russell Indexes senior research director. "By more accurately identifying what percentage of developed market company revenue comes from emerging markets and assembling an index based on this exposure, we offer an efficient way to access emerging market opportunities."
The Russell GeoExposure Index Series, four new indexes developed from existing Russell Global Indexes, follow a transparent and rules-based methodology to identify companies with exposure to emerging markets, and then adjusts the weight for each company within the index to reflect the significance of this exposure. The emerging markets index set is Russell Indexes first application of its new geographic exposure concept.
The Series initially consists of four indexes based on Russell Global Indexes:
- Russell 1000® Emerging Markets GeoExposure Index
- Russell Developed Large Cap Emerging Markets GeoExposure Index
- Russell Developed Europe Large Cap Emerging Markets GeoExposure Index
- Russell Developed ex-North America Large Cap Emerging Markets GeoExposure Index
The new methodology identifies companies with targeted geographic exposure, in this case emerging markets, from a Russell developed markets parent index. In today’s more interconnected world, investors can often participate in the potential of emerging markets through developed markets and multinational companies. However, due to a lack of standard guidelines in how companies report geographic sources of revenue, accurately identifying what portion of a company’s exposure comes from emerging markets can prove difficult. To address this challenge Russell has aligned with leading data classification firm Revere Data LLC, an industry expert in financial statement analysis, to capture geographic revenue information. Revere’s 40 full-time U.S. based analysts cover more than 40,000 stocks traded on 35 global exchanges, reviewing filings, management discussions and footnotes to produce the most accurate estimate of company revenue sources obtainable.
“Revere is pleased to work with Russell on this important index innovation,” said Kevin O’Brien, CEO of Revere, “particularly in a time when emerging markets exposure is becoming a more important factor in investment diversification and performance.”
The revenue identification process utilized by the Russell GeoExposure Indexes helps uncover differences among companies in similar industries which may not be readily apparent. And the index methodology takes both percentage and absolute revenue into consideration, an important factor in determining a company’s geographic exposure in the index. For example, a screen based solely on percent of revenue derived from emerging economies would eliminate companies like Boeing, which has large absolute revenues from emerging economies but a small percentage amounting to only an estimated 14% of its total revenue. On the other hand, a screen based on total dollar revenue alone would eliminate smaller companies like Eldorado Gold, which has an estimated 98% of its total revenue but only $1.08 billion in revenue derived from emerging economies, and a corresponding high correlation to emerging markets equities. Russell’s new indexes offer more precise information about markets exposure for more informed investing decisions.
For more information about the Russell GeoExposure Index Series, including construction and methodology, please go to the Russell Indexes website.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offer actively managed multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell's core capabilities extend across capital markets insights, manager research, portfolio construction, portfolio implementation and Indexes.
Russell has about $152 billion in assets under management (as of 6/30/2012) and works with 2,400 institutional clients, more than 580 independent distribution partners and advisors, and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 12/31/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.5 trillion in 2011 through its implementation services business. Russell calculates more than 80,000 benchmarks daily covering 98% of the investable market globally, 85 countries and more than 10,000 securities. Approximately $3.9 trillion in assets are benchmarked to the Russell Indexes.
Russell is headquartered in Seattle, Washington, USA. Russell has offices around the world including Amsterdam, Auckland, Chicago, Frankfurt, London, Melbourne, Milan, New York, Paris, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow us @Russell_News.
Revere Data, LLC, is a leading provider of specialty datasets, analytics and index solutions for the financial services industry. The company focuses on leading edge industry classification systems, supply chain, and revenues by geography data. Products such as the Revere Hierarchy™, Revere Supply Chain Relationships™, RISC Focus™ and Revere GeoRev™ deliver a more precise and deeper view of the market for thousands of publicly traded companies in the U.S. and around the world. Revere's customers include some of the world's leading global financial institutions, asset management firms, fund sponsors, corporations, and media outlets. Revere Data is headquartered in San Francisco with offices in New York, Boston and Youngstown, Ohio. For more information, visit www.reveredata.com or follow us on Twitter @reveredata.
Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Russell Investments is the owner of the trademarks, service marks and copyrights related to its respective indexes. Russell’s indexes are unmanaged and cannot be invested in directly.
Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
Revere Data, LLC is not a registered adviser or broker/dealer, and it does not have any affiliated entities or subsidiaries that are registered adviser or broker dealer. Revere Data is primarily a provider of financial data and analytics to institutional investors, index developers and corporations. Revere Data is the owner of the trademarks, service marks and copyrights related Revere GeoRev. Revere Data, LLC is a Delaware Limited Liability Corporation located in 1 California St. CA 94111.