How does an index framework built with diverse constituents from 48 global markets help address concentration concerns in an efficient, simplified way?
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S&P TIP Global AllCap Index: A New Tool for Tracking Diversification and Limiting Concentration Risk in Global Equities
In recent years, many market-capitalization-weighted global equity benchmarks have become increasingly concentrated, with a small number of large-cap stocks accounting for a growing share of index weight. For market participants in Taiwan, this pattern is not new, as both Taiwan’s equity market and many major global equity indices have become heavily tilted toward a small number of technology names. The S&P TIP Global AllCap Index framework helps address concentration concerns in an efficient, simplified way, introducing structural checks on country and constituent concentration.
The transparent, rules-based index:
- Covers large-, mid- and small-cap stocks across the globe.
- Targets 90% of the total float-adjusted market capitalization (FMC) of the S&P Global BMI.
- Spans 48 markets worldwide—23 developed markets and 25 emerging markets.
The index is deliberately selective. While the S&P Global BMI includes 15,000+ constituents, the S&P TIP Global AllCap Index methodology filters the S&P Global BMI universe down to 2,200+ companies, each of which must have a minimum FMC of USD 1 billion to be included. Starting from the S&P Global BMI universe, constituents are selected by ranking companies by FMC and included in descending FMC order until approximately 90% of the underlying index's total FMC is covered. While the index is float market cap-weighted, each country is subject to explicit upper and lower weight limits.
For larger markets, the methodology allows for country weights to deviate by roughly +-3% from their weights in the S&P Global BMI. For smaller markets, the allowed deviation range is around 0.5%. These country-weight constraints help ensure that the index is not dominated by any single market. The result is a more balanced set of global equities. The S&P TIP Global AllCap Index still holds many of the world’s leading companies, but it is constructed so that a small number of stocks do not occupy an outsized share of the index. The index is reconstituted annually in September and reviewed quarterly. Large IPOs can be added quickly, according to the index rules.
When assessing Taiwan equity weights alongside the structure of the broader global equity market, the S&P TIP Global AllCap Index can serve as a reference benchmark for market participants seeking to understand global market capitalization and concentration risk. A look inside the index also reveals a more balanced sector profile compared with the S&P Taiwan BMI’s 83% weight in Information Technology. Regional filters, combined with explicit constraints on index concentration, help the S&P TIP Global AllCap Index serve as a structured lens on global diversification.
To learn more about the S&P TIP Global AllCap Index, including the full methodology and latest data and research, scan the QR code at the end of the video to visit the index page.
spglobal.com/spdji/en/indices/equity/sp-tip-global-allcap-index
