Two meetings later, there were five new countries in the DJGI lot.
"We changed the DJGI methodology to make it a viable option for clients looking for expanded global coverage, and those looking for measures of these five markets," says the 14-year Dow Jones veteran. "With the inclusion of Russia, India, China, Israel and Turkey, DJGI became instantly more attractive to a whole new set of people. It was much easier for them to use the index as the basis for products. In a sense, it became much more 'global.'"
With the change in style and the new additions, Bernadette sees DJGI as offering a better "selection pool," as she terms it. The five new countries attract money managers interested in just those specific markets—and more to the point, to the stocks that are domiciled there. And with 95% coverage of each new market—excluding only very small and illiquid securities—the indexes include all stocks that managers would potentially want to use as a starting point for portfolio construction.
"We have some very well-known benchmarks, like the Dow Jones Total Stock Market (TSM) indexes," she explains. "But a lot of our clients prefer an opportunity set they themselves can invest in."
Bernadette sees the potential for both new and established clients.
"By adding these five markets, we are expanding our reach and appeal. Clients will be able to easily replicate these indexes. That means more opportunities for index-linked products, like ETFs, futures and options."
Bernadette says that the DJI Index Oversight Committee chose this global quintet because the countries are considered important indicators of global economic health. Some market professionals believe that they will lead the way in any financial and market resurgence worldwide.
"When you think about a recovery, not just in emerging markets like these five, but among the developed world as well, countries like these will be bellwethers." She ticks off factoids and points of interest about each country. "China's market has been on the rise, and its consumer and government spending power are surging. India's economy was not as affected by the global crunch, and its markets have not suffered as badly. Turkey is so important culturally, economically and geographically to Europe, the Middle East and Central Asia. Israel is integrated into multiple markets, regions and free-trade agreements. And Russia's natural resources, infrastructure and influence around the world still make it formidable, no matter what the commodities markets do.
"Each of these countries' performance has a direct effect on multiple others—both established and up-and-coming. When these five move, other markets will as well. When Russia moves, for instance, so does Eastern Europe and Central Asia. This methodology change was made with that in mind."
Bernadette is a "never say never" sort of person. She suggests that there may be more changes in the future for the newly resurgent DJGI—and for the better.
"We are continuously working to make DJGI—and all our indexes—more usable; more useful. In a word: better. So this is part of a process. We want the family to be as appealing as possible for our clients."
She reads an email from a potential customer who wanted more information on the index now that it included Russia (the client's desired country). At this, Bernadette cannot help but be excited. The client soon replies asking for marketing materials.
"The change to DJGI just makes it so much more relevant to our market. Clients know a good thing. We'll keep making the changes if that's what it takes to help them. That's what it's all about."