DEFINITION of Dow Jones BRIC 50 Index
The Dow Jones BRIC 50 Index is a market capitalization-weighted stock index containing 50 of the most liquid and largest companies operating in Brazil, Russia, India and China (BRIC nations). The index uses the Dow Jones Global Indexes as its stock universe for the four nations, which cover approximately 95% of the market capitalization on local exchanges. Fifteen positions are targeted for each Brazil, Russia and China, while Russia's representation is targeted for five positions.
BREAKING DOWN Dow Jones BRIC 50 Index
Selection for the index is based on a ranking system that looks equally at free-float market capitalization and average daily volume. The top 10 ranked stocks in each subindex are selected, along with a customized selection of five more between the rankings of 11 and 20 (these numbers are prorated for Russia). The subindexes are the Dow Jones BRIC Brazil 15 Index, the Dow Jones BRIC China 15 Index, the Dow Jones BRIC China 15 Capped Index, the Dow Jones BRIC India 15 Index, the Dow Jones BRIC India 15 Capped Index and the Dow Jones BRIC Russia 5 Index.
The index is reconstituted annually and weightings are adjusted quarterly. No single stock can make up more than 10% of the BRIC 50 Index.
BRIC investing is a trendy strategy, as these nations represent large, developing economies that are becoming more and more involved in the global economy. China representation is sought only in the offshore market, where H-shares and American depositary receipts (ADRs) are available on different stock exchanges.
Breakdown of Subindexes:
Dow Jones BRIC Brazil 15 Index
This index represents 15 of Brazil’s largest and most liquid companies traded on the Bovespa stock exchange.
Dow Jones BRIC China 15 Index
This index represents 15 of China’s largest and most liquid companies whose principal operations are in mainland China, but trade on the exchanges of Hong Kong and the U.S.
Dow Jones BRIC China 15 Capped Index
A capped version of the Dow Jones BRIC China 15 Index where company weights are capped at 19%.
Dow Jones BRIC India 15 Index
This index represents 15 of India’s largest and most liquid companies traded on the Bombay Stock Exchange.
Dow Jones BRIC India 15 Capped Index
A capped version of the Dow Jones BRIC India 15 Index where company weights are capped at 19%.
Dow Jones BRIC Russia 5 Index
This index represents five of Russia’s largest and most liquid companies traded on the MICEX stock exchange.