How to calculate correct market cap weights

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rofire
Posts: 5
Joined: Wed Jan 06, 2021 4:41 am

How to calculate correct market cap weights

Post by rofire »

Hi All,

Currently I'm investing in the following 3 funds: IWDA + EMIM + IUSN
And I want to calculate the correct market caps weights.

So I'm looking at the corresponding MSCI indexes:
- https://www.msci.com/documents/10199/14 ... fcb5bd6523
- https://www.msci.com/documents/10199/97 ... 7095acf1d3
- https://www.msci.com/documents/10199/a6 ... 102eaa8399

And calculating everything proportionally to the "Mkt Cap" of the "Index" (top left of second page).

So that would be as of 31.12.2020:
- IWDA - market cap 51,356,268.07 - 76.18%
- EMIM - market cap 8,816,394.92 - 13.08%
- IUSN - market cap 7,238,566.34 - 10.74%

Is this the correct approach to calculate this?
And is this the best approximation of VT available with Irish domiciled funds?

Thanks!
andrew99999
Posts: 770
Joined: Fri Jul 13, 2018 8:14 pm

Re: How to calculate correct market cap weights

Post by andrew99999 »

I normally use VT to check the EM percentage, which says 10.8
Then, if your funds are using MSCI, split the rest 85/15 because that is the MSCI definition of large+mid vs small. Each index has its own definition of small caps.
oogZoo
Posts: 58
Joined: Mon Sep 02, 2019 12:05 pm

Re: How to calculate correct market cap weights

Post by oogZoo »

andrew99999 wrote: Wed Jan 13, 2021 11:22 am I normally use VT to check the EM percentage, which says 10.8
VT is based on FTSE index and therefore the ratio of developed/emerging markets is not exactly correct for someone who is using MSCI based funds. MSCI classifies South Korea as emerging market whereas FTSE classifies it as developed market. (I am not sure if there are other differences currently.)

To me OP's method sounds more correct for his case (MSCI based funds).
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