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Unmasked: the geographical distortion of benchmarks

If a company is listed in Germany but most of its sales are in China, it is wrong to believe it provides European exposure. Research reveals how far some indices have strayed from reality

Getty Images
Getty Images

Surprising as it seems, despite the sophistication of modern-day risk analysis, equity managers end up reporting the performance of a portfolio based on simple factors such as a company’s primary listing and its place of incorporation.

In today's global marketplace, it is questionable whether this simple exercise can ever provide an accurate indication of the underlying geographic exposure of a stock, still less its underlying risk exposures.

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