Market classification is a crucial component in constructing the investment universe at EFM, as it directly influences the composition of the investment opportunity sets, we consider. EFM’s approach aligns with the views and practices of the international investment community, ensuring that we balance a country’s economic development with the accessibility of its Markets, all while preserving stability.
The EFM Market Classification Framework is built on three essential criteria:
Economic Development
We assess a country’s growth trajectory and development stage to identify promising investment opportunities within its market.
Size and Liquidity
Evaluating the market’s size and liquidity ensures we focus on Markets that provide sufficient opportunities for meaningful investment and risk management.
Market Accessibility
EFM places high importance on the ease of entry and operation within a market, considering factors such as regulatory environment, foreign investment restrictions, and operational challenges.
This disciplined framework allows us to navigate emerging and frontier Markets with precision, ensuring that every investment decision is rooted in a comprehensive analysis of these key factors.
Criteria | Frontier | Emerging | Developed |
|---|---|---|---|
Company Market Capitalization | $630 Million | $2160 Million | $2519 Million |
Freely floating securities; ie securities available to investors for the non-promoter group | $49 Million | $630 Million | $2160 Million |
Liquidity | At least 2.5% annualized traded volume ratio (ATVR) | At least 15% annualized traded volume ratio (ATVR) | At least 20% annualized traded volume ratio (ATVR) |
Criteria | Frontier | Emerging | Developed |
|---|---|---|---|
Foreign Ownership | Little | Significant | High, if not complete |
Ease of capital movement in and out of the economy | Partial | Significant | High, if not complete |
The efficiency of the operational framework | Modest | Good | High, if not complete |
Stability of Institutions | Modest | Modest | High, if not complete |