(PRWEB) January 8, 2005
The MSCI EAFE (Europe, Asia & Far East) Index is the highest profile international index and includes twenty one well developed countries excluding the US and Canada.
One flaw in the index is that it weighs each of the 21 countries in the index by the size of its stock market (market capitalization). As a result, Japan and the United Kingdom together account for about half of the indexÂs value.
Chartwell Partners, an indexing and ETF specialist, has introduced an index using the same 21 countries but weighs each country equally in the index.
The Chartwell Equal Weight MSCI EAFE Index has beaten the MSCI EAFE Index during the past three years by 2%, 11% and 9%.
ÂWhile we appreciate the low cost and flexibility of indexing and ETFs, we challenge the conventional wisdom of weighing specific investments by market capitalizationÂ stated Chartwell President Carl Delfeld in a recent interview.
According to Delfeld, Chartwell's equal weighting approach makes more sense than weighing countries by the size of their stock market. It is also more forward looking since few analysts would contend that Japan and United Kingdom will grow much faster over the next decade than say, Hong Kong and Ireland.
Nevertheless, in the MSCI EAFE Index, Japan's and the United Kingdom's weight in the index is about fifteen times greater than Hong Kong and Ireland. In the Chartwell MSCI EAFE Index, they are weighted equally.
Delfeld added that Chartwell plans on introducing a MSCI EAFE Equal Weight Index Fund by the end of 2005.
About Chartwell Partners
Chartwell Partners, a global investment advisory firm specializing in ETFs/iShares, has introduced a new web-based investment advisory service located at http://www.chartwelladvisor.com. It offers subscribers four global portfolios that were up 18.6%, 27.6%, 25.0% and 27.7% in 2004.
About Carl Delfeld
Carl Delfeld is President of Chartwell Partners, a global investment advisory firm. He was formerly with UBS and Northwestern Mutual, a consultant to the U.S. Treasury and U.S. Congress as well as a U.S. Representative to the Asian Development Bank. Carl is also the author of a new book ÂThe New Global Investor: Using ETFs to Build Smarter, Simpler and Safer Portfolios.Â