Bloomberg Professional Services
This article was written by Qiao Yu and Utkarsh Agrawal, Index Product Managers at Bloomberg.
In an era of economic uncertainty, marked by high interest rates, geopolitical conflicts, growing trade protectionism, to name a few, identifying resilient investment opportunities has become increasingly challenging. While safe-haven assets like gold have performed well, equities remain in focus to capture the long-term growth potential. Companies with strong fundamentals are better equipped to navigate volatile periods, while the sectors with strong momentum adapt quickly to policy changes and economic shifts. These qualities of the companies make them appealing to those looking for stability and growth opportunities.
Just over two years ago, Bloomberg introduced the Bloomberg Global Industry Elite 55 Index (“Elite 55 Index”) with the vision of measuring the performance of largest and profitable companies from each sector with a strategy that emphasizes overweighting sectors demonstrating high momentum. In our previous blog, we discussed the robust methodology behind the Index. As we transition into 2025, let us revisit how this index has performed since its launch in November 2022.
The Elite 55 Index demonstrated strong outperformance vis-a-vis its parent universe, Developed Markets ex APAC Index (“DM ex APAC Index”), delivering a cumulative 24.64% higher return through the end of 2024. A detailed factor attribution analysis using Bloomberg’s PORT reveals that 8.12% of this outperformance stems from the Selection Effect, while 16.52% can be attributed to Factor contributions.
The Style Factors contributed 6.77% to the overall active return, with Momentum accounting for 3.89% of the active return. Industry as well contributed 6.67% to the active return. This outcome is well anticipated and reinforces confidence that the methodology performed as intended.
Diving deeper into the Selection Effect, Technology and Communications sectors dominated the active return contribution with highest overweight positions. Notably, NVIDIA, which was overweight by 3.73%, contributed a remarkable 10.73% to the active return. The Selection Effect over the period demonstrates that the methodology effectively leveraged the largest top performers within the sectors.
The live performance of the Elite 55 Index over the past two years reflected the robustness of its methodology in selecting leading companies across various sectors known for their growth potential and strong financial health. The approach has also proven resilient in other markets like Europe and Emerging Markets. A simulated Europe Elite 55 concept delivered 2.8% outperformance vis-a-vis Europe 600 Index, while the Emerging Markets Elite 55 concept outperformed Emerging Markets Index by 1.8% since March 30, 2015.
In this fast-paced and often volatile world of financial markets, identifying the right investment strategies sets the outcomes apart. As we look ahead, it will be interesting to see how this innovative approach to index construction continues to perform across global markets.
KGI Securities Investment Trust has launched the KGI Global Industry Elite 55 ETF based on the Bloomberg Global Industry Elite 55 Index (BGIE55T) under the ticker 00926 TT Equity.
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