Elston launches Commonwealth equity index family

Elston Consulting has launched the Elston Commonwealth Index family, comprising four equity indices that track publicly listed companies domiciled in Commonwealth countries.

The indices are designed to measure the performance of Commonwealth equities as a single market grouping. Companies from Canada, the United Kingdom, India, Australia, Singapore and South Africa make up most of the index family.

The Elston Commonwealth 100 tracks the 100 largest companies by market capitalisation. Its equal-weight version assigns the same weighting to each company. The Elston Commonwealth 500 covers the 500 largest companies by market capitalisation, while its equal-weight version gives each constituent the same weighting.

Elston’s historical analysis found that the equal-weight Commonwealth 100 produced the strongest risk-adjusted returns among the four indices. The firm is considering it as the basis for a future fund, although the indices are currently research tools and are not investable products.

Elston is seeking partnerships with fund providers to create funds that track the new benchmarks. The indices group companies from markets commonly classified as developed or emerging economies.

“This has been a gap that we’ve been meaning to close for a while,” Hoshang Daroga, Elston’s investment director, wrote. “It seemed ironic that whilst common legal traditions, common business language, and shared heritage groups many of these businesses together, there was no formal grouping in the world of equity indices.”

Henry Cobbe, Elston’s founder and head of research, described the Commonwealth as an opportunity to develop business links and dialogue among publicly listed companies. “This is very much not about looking back,” he wrote. “It’s about looking forward and creating business links, and dialogue within a unique opportunity set.”

The Commonwealth has 56 member countries. Elston cited English as a common business language, common-law legal traditions, democratic principles and the rule of law as shared features. The Commonwealth Enterprise and Investment Council refers to these features as the “Commonwealth Advantage” and has reported higher trade between member states and lower trading costs compared with similar external partners.

Elston Consulting is headquartered in London. Cobbe and Daroga developed the index concept, and both have links to Commonwealth countries.