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Navigating Global Markets with the S&P World Index

  • Length 5:53

What sets the S&P World Index apart when it comes to tracking developed markets around the globe? Explore how extensive coverage, historical consistency, transparency and adaptability are helping global investors make more informed decisions as they seek to uncover opportunities and navigate risks across economic cycles.

[TRANSCRIPT]

Navigating Global Markets with the S&P World Index

In today’s interconnected financial landscape, investors seek comprehensive tools to effectively navigate global markets. The S&P World Index provides a broad measure of equity performance across developed markets, serving as a valuable benchmark for market analysis and a potential blueprint for financial products requiring broad coverage.

What is the S&P World Index?

The S&P World Index tracks the performance of large- and mid-cap stocks across 24 developed markets, encompassing over 1,500 companies. The index is designed to represent the overall market performance of developed economies, offering insights into both country- and sector-specific trends. This broad coverage tracks approximately 85% of each country’s available market capitalization, providing a thorough representation of the potential developed market opportunity set.

What is the historical significance of the index, and how is it constructed?

The S&P World Index, introduced in 2009, has back-tested data available since July 1989 and is constructed on the robust foundation of the S&P Global Broad Market Index, or BMI, which includes nearly 15,000 stocks from around the world. Launched in 1989 as the first float-adjusted benchmark, the S&P Global BMI set the standard for modern index construction by excluding locked-in shares not freely available to investors. With over $1.2 trillion in benchmarked assets linked to the index, the S&P Global BMI has become an integral part of global market analysis. The S&P World Index builds on that legacy.

Let’s take a look inside the index and its sector and style diversification.

The S&P World Index covers over 350 subindices categorized by GICS sector, style and currency. This granularity enables market participants to analyze and target specific segments within developed markets, and better assess the relative performance of their strategies. The GICS classification provides a framework for understanding how industries evolve and perform within developed economies, supporting precise portfolio diversification. With data extending over several economic cycles, the S&P World Index provides a consistent universe for historical market analysis and back-testing investment strategies.

How does the index incorporate sustainability screens?

Recognizing the growing importance of sustainable investing, the S&P World Index family includes versions that incorporate sustainability considerations. These indices leverage S&P Global’s comprehensive sustainability datasets, allowing market participants to integrate sustainability-related considerations, like measuring the relative performance of companies from a carbon emissions to revenue viewpoint into their investment processes.

Who governs and calculates the index?

S&P DJI has always prioritized transparency, independence and integrity. We adhere to industry best practices and evolving regional regulatory standards, ensuring the S&P World Index remains a reliable and accurate benchmark for global investors. The index methodology is reviewed regularly by an independent oversight committee, ensuring it evolves alongside market dynamics while maintaining its foundational principles.

What are some practical applications of the index?

The S&P World Index serves multiple functions, including:

Performance measurement and benchmarking. Fund managers can use it to compare their portfolios against a comprehensive global standard.

Product development. The index’s extensive coverage supports the creation of financial products like ETFs, mutual funds, futures and options that require broad market exposure.

Risk management. By offering insights into market trends and sector performance, the index supports strategies for managing portfolio risk in a dynamic environment.

In an era where global market dynamics are increasingly complex, the S&P World Index offers investors a robust tool for comprehensive market analysis and informed decision-making. The index’s adaptability to global investment trends and its focus on transparency make it a valuable resource for understanding and navigating developed markets. Its extensive coverage, historical consistency and adaptability to sustainable investing needs make it an essential component in the toolkit of today’s global investor.

Want to learn more about the S&P World Index? Visit us at the link below.

spglobal.com/spdji/sp-world-index



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