Diversification

Capping factors guarantee well-balanced and diversified index exposure, thus preventing large companies from dominating an index. We have developed an elaborate cap factor model that on one hand prevents overweighting and on the other hand still reflects the actual size of a company in relation to all index components. Cap factor model:

  • Country and regional indices: Maximum cap of 8% for local companies and 4.5% for offshore companies.
  • Commodity and Sector indices: Maximum cap of 8 percent (or 20% for selected indices).
  • Special capping schemes: MVIS Australia Banks and MVIS Australia A-REITs Indices.

The table shows the weight distribution of the biggest companies in the MVIS Russia Index with and without the application of cap factors. A full overview of capping rules can be found in Chapter 4 of the MVIS Global Equity Index Guide.

Component Weighting in MVIS Russia Index

(example values based on previous index reviews)
Comapany Country Float MCap Weight Capped Float MCap Capped Weight Capping Factor
Gazprom RU USD 49,092,949,658 18.24% USD 13,406,526,677 8.00% 0.273085
Sberbank RU USD 31,447,865,846 11.69% USD 13,406,526,677 8.00% 0.426310
Lukoil RU USD 29,695,280,738 11.04% USD 11,730,710,842 7.00% 0.395036
Novatek RU USD 20,367,871,111 7.57% USD 10,892,802,925 6.50% 0.534803
Magnit RU USD 18,689,115,096 6.95% USD 10,054,895,008 6.00% 0.538008
... ... ... ... ... ... ...
Raspadskaya RU USD 105,833,521 0.04% USD 105,833,521 0.06% 1.000000

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