Is that the reason for using the modified market capitalization weighting?
Thats one of the reasons, and that approach is necessary to avoid buying just two or three stocks when you buy a fund. Also, the index providers can put in place very stringent liquidity requirements, so that every company has to trade a certain amount of average daily volume, regardless of its market cap. Thats the case in Russia, where in addition to a $150 million market cap hurdle, there is a requirement of $1 million dollars of average daily volume along with a minimum trading history period before new IPOs can be included in the index. Q: What types of investors usually choose these ETFs? A: Many of the ETFs have trading characteristics that fit into various models used by financial professionals. The Gold Miners ETF, for example, has a beta 2 to gold bullion and is often used tactically within commodity portfolios. Financial professionals are also using the ETFs within sector rotation strategies, pairs trading, and hedging against individual stock. Options trading on our ETFs ha
