The MSCI 25/50 Indices are designed to take into account US Internal Revenue Code investment constraints needed for a fund to qualify as a regulated investment company (RIC) …...
in the US. The investment constraints pertain to both asset diversification and sources of income. The new MSCI 25/50 Indices are designed to be more appropriate benchmarks for asset managers running US registered sector or country RIC compliant funds, which may contain a small number of securities or a few heavily weighted securities
The MSCI 25/50 Index Methodology follows a portfolio optimization framework using the Barra Optimizer. Its primary objective is to ensure that the US IRC constraints are respected. This optimization also aims to minimize weight differences between the MSCI 25/50 Index and the Parent Index, while maintaining a relatively low index turnover. The indices are rebalanced quarterly at the end of February, May, August and November.
The MSCI 25/50 Indices may be licensed for use by institutional and retail investors around the world for portfolio management and benchmarking purposes. In addition, the indices may also be licensed to serve as the basis of index-linked investment vehicles such as passive funds and ETFs.
Source: ETFWorld.com – MSCI BARRA
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