Dow Jones Introduces Country Classification System

Dow Jones Indexes has introduced a country classification system that will apply to all countries covered in its major index families.

All countries included in the indexes will be researched individually and assessed according to a pre-defined framework built around the needs of international portfolio investors in three broad categories: market and regulatory structure, trading environment, and operational efficiency.    

According to a company release, the assessments will be used to produce a country classification assignment including: 

  • Developed Markets, the most accessible to, and supportive of, foreign investors with a high degree of consistency across these markets   
  • Emerging Markets, which generally have less accessibility relative to developed markets, but demonstrate a level of openness, and  
  • Frontier Markets, which are typically much less accessible to foreign investors, exhibit notable limitations in their regulatory and operational environments, and support a smaller investment landscape.  

The prior country classification system did not offer a Frontier assignment.   

The assignments will be formally reassessed each year in June by the Dow Jones Index Oversight Committee (IOC), which will make the final classification assignment decision for each country. A public announcement of classification changes, if any, will be made in September of each year. Classification changes will occur with a minimum of six months notice.  

The new country classification system will be rolled out in stages to the full suite of Dow Jones indexes, beginning with the March 2011 review.  The transition of each index or index family from the old country classification system to the new country classification system will be announced individually.