CHAPTER 8

Universe, Eligibility and Selection

Deciding which securities get into the basket

Opening question

“There are more than a thousand stocks traded in Vietnam. Why does the VN30 hold only thirty of them — and who decided which thirty?”

In this chapter

Defining the universe: exchange, security type, nationality and share class
Eligibility screens: free float, liquidity, size, price, trading history and foreign-ownership room
Three ways to select: top-N, market coverage and score-based
Buffer zones and why they halve turnover
Fast entry for large IPOs
The trade-off between investability and representativeness
Vietnam: HOSE, HNX and UPCoM, and the logic of the VN30

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 8 — with its tables, figures, worked examples and practice lab — is available in the complete edition of Index Investing: From Theory to Practice (Volume 1, NXW Investment Library).

Read Chapter 1 free Get the full book — [email protected]

Sections of this chapter

8.1 Three filters: universe, eligibility, selection

8.2 Defining the universe

8.3 Eligibility screens

8.4 Foreign-ownership limits and foreign room

8.5 Selection: top-N, coverage and scores

8.6 Buffer zones and fast entry

8.7 Investability versus representativeness

8.8 Exchanges in Vietnam: HOSE, HNX and UPCoM

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