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Building an index for the world’s share markets sounds straightforward. But it involves a series of well-reasoned and subtle design steps, together with expert oversight from market professionals.
In the latest episode of FTSE Russell Index Ideas, Arne Noack, head of equity and multi-asset Indices, Americas, at FTSE Russell, describes our approach to building global equity benchmarks—from country selection to regional and size classifications and current demands from clients for more customised exposures.
Noack starts by outlining the key features of the FTSE All-World index, FTSE Russell’s flagship global equity benchmark.
At the end of February, 2026, the All-World index contained over 4,250 stocks from 48 global equity markets. A 49th market, Vietnam, is due to be added to the index in stages, starting in September 2026.
But what determines which markets and stocks make it into the index? The FTSE All-World contains large- and mid-cap stocks from developed and emerging markets.
“Use of the nomenclature ‘world’ isn't always consistent across all index providers,” Noack says in the podcast.
“Not all world indices do, for example, contain emerging markets. So from a very high level, that’s one of the key differences that investors and benchmarkers can encounter,” Noack goes on.
And how does FTSE Russell then build the All-World index?
“We split the global equity universe into nine regions,” Noack says in the podcast.
“The US is a region, Canada is a region, then developed Europe, emerging Europe, Japan, China, Asia Pacific, Latin America, as well as Middle East and Africa.”
“What that means is the stocks within each of those regions are grouped amongst each other. The top 70% market cap names are then considered to be large-cap names, the next 20% to be considered mid-cap names, and then the rest are small and micro-cap names.”
“So essentially what that also means, if you're a European stock of a certain size, you could be considered a large cap. If you were hypothetically listed in a different region, you could fall into a different bucket. So it is important to understand that the ranking is a relative one within the respective region,” Noack explains in the podcast.
Noack goes on to explain how the global equity markets have become more open and accessible, something that’s been reflected in the number of markets that make it into the FTSE All-World: in 1987, we included only 24 markets in our flagship global equity index (then called the FT-Actuaries All World), whereas now there are 48.
“Over time, what is considered to be a developed and emerging market--that understanding has evolved,” Noack says.
“The market's availability to invest in those equity markets has emerged. That development leads to a bigger inclusion of countries in the given index.”
But the inclusion process has had a rigorous analytical framework behind it.
“At FTSE Russell, we publish a Quality of Markets matrix, which seeks to assess and make transparent how we see the different markets,” Noack says.
“So what influences that, for example, is how easy is it to trade equities in a given market and how easy is it to trade the foreign exchange in a given market.”
In the podcast, Noack goes on to explain how FTSE Russell draws on both internal and external expertise when overseeing its global equity indices.
“The decision [on what goes into the indices] still rests with FTSE Russell and our internal governance processes in terms of what we deem to be relevant in terms of decision-making. [We want] to be a good benchmark and an arbiter between the different potential interests that are being brought towards us from the different market practitioners.”
To make sure practitioners’ views are reflected in the global equity indices’ design and evolution, FTSE Russell’s internal experts are complemented by external advisory boards.
“These include practitioners from the sell-side—banking trading desks, for example—but also the buy-side, representing active or index fund managers, or even academics from different areas,” Noack says.
There’s still plenty of client demand for FTSE Russell’s All-World index, which boasts nearly 40 years of history, Noack says at the end of the podcast.
“We see a lot of interest for our global benchmark. It's a very convenient way to allocate capital to the global equity market and be very, very diversified across regions.”
To listen to the podcast, click here.
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