There are various strategies to construct a diversified portfolio, but if the goal is complete representation of the investable market, then the best way is to take 98% of the total market cap, market weight it, and adjust it for free float, according to Kelly Haughton. Transparency and
objectivity are the other key elements of Russell’s philosophy, as index membership is based on a strict set of rules available to everyone, not on the decision of a committee. |
