The Oyster Emerging Opportunities Fund looks to beat the MSCI EM index but it is designed on an index that is equally weighted between the 21 countries that make up the MSCI EM index with an adjustment for market liquidity.
Of these countries, the five largest (China, South Korea, Brazil, Taiwan and South Africa) account for a weight of more than 65% in the index.
Weigthing by country
Source: Oyster; MSCI
The new approach, built by the Syz fund research unit, aims to get away from the more typical concentration on stock markets with the largest cap sizes, greater geopolitical risk and over-representation of certain countries.
It equally weights each country and then makes an adjustment for market liquidity. The fund, managed by Boston-based Acadian Asset Management, is then rebalanced once a year or when an exceptional event occurs.
“Our role is not confined to selecting the best managers, but also involves proposing innovative strategies,” explained Katia Coudray Cornu, head of SYZ fund research. "With this fund, we wanted to revisit the way in which the country allocation of an emerging market fund is carried out.
