Accounting for Geographic Exposure in Performance and Risk Reporting for Equity Portfolios

Accounting for Geographic Exposure in Performance and Risk Reporting for Equity Portfolios — March 2015

Section 2: Application to Performance and Risk Reporting

have maximum exposure to non-domestic regions (55% in FY2012).

The breakdown of sales into developed and emerging markets suggests that the exposure of companies in the three broad developed market indices to emerging markets is noticeable. The companies in the STOXX Europe 600 have maximum exposure to emerging markets (23%). The exposure to emerging markets is also increasing, with the highest increase for companies in the STOXX Europe 600 (16%). Overall, these observations underline the need to report the exposure of equity portfolios in terms of geographic sources of revenue and go beyond the simplistic measures such as place of listing of stocks or a company's headquarters and place of incorporation.

37

An EDHEC-Risk Institute Publication