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+{{tag>paper}}
+====== Benchmark ======
+//A benchmark is typically a broad-based index of securities such as the S&P 500,
+MSCI World, or Russell 2000. [(:ref:fisher_investments_energy)]//
+There are dozens of different measures, one for each variety of crude. The financial market focuses on two: Brent, and West Texas Intermediate, the grades traded in London and New York, respectively. They suggest a price hovering around $90 a barrel.
+{{:a-z:energy_benchmark_differences.png?600|}}
+Commonly used benchmarks include the MSCI World, MSCI EAFE, S&P 500, Russell 2000,
+and MSCI Emerging Markets. The MSCI World is a market-capitalization weighted index
+designed to measure the equity market performance of developed markets (encompass-
+ing 23 developed markets, including the US). The MSCI EAFE is a market-capitalization
+weighted index that measures the equity market performance of developed markets
+excluding the US and Canada. The S&P 500 is a market capitalization weighted index that
+measures the equity market performance of a basket of 500 stocks that encompass the
+majority of the US equity universe. The Russell 2000 is a market-capitalization weighted
+index that measures the equity market performance of the small-cap segment of the US
+equity universe. Lastly, the MSCI Emerging Markets is a market-capitalization weighted
+index that measures the equity market performance of emerging markets (encompassing
+emerging market countries). [(:ref:fisher_investments_energy)]
+{{:a-z:energy_weight_by_country.png?400|}}
+But the sector weights aren ’ t fixed and can change over time—due
+to performance differences, additions and deletions of firms to the
+indexes, and a variety of other factors. For example, Financials wasn ’ t
+always the biggest, and for many decades Industrials dominated. [(:ref:fisher_investments_energy)]
+{{:a-z:energy_sub_industry_weights.png?600|}}
+It’ s
+important to consider the regions as well, because in a top-down con-
+text, local economic and political conditions will have a large impact
+on sector, industry, and sub-industry performance. For example, <wrap hi>if you
+expect the US will perform well overall in the near term, that bodes
+well for Oil & Gas Drilling and Oil & Gas Equipment & Services,
+where most of those companies are located. And how you expect
+Emerging Markets to perform overall should figure into your expecta-
+tions for Coal & Consumable Fuels.</wrap> [(:ref:fisher_investments_energy)]
+{{:a-z:energy_subindustries_by_region.png?600|}}
+So why are they such a small percentage
+of the Russell 2000? Because IOCs are generally too large to appear in
+the small cap Russell 2000 index. [(:ref:fisher_investments_energy)]
+It’ s also important to note many of the world ’ s most significant
+Integrated Oil & Gas companies are owned by foreign governments
+and therefore are neither publicly traded nor reflected in stock mar-
+ket indexes. For example, Saudi Aramco, Saudi Arabia ’ s National Oil
+Company, is the largest oil company in the world based on produc-
+tion and reserves, but it ’ s not represented in stock market indexes
+because it’ s entirely state-owned. [(:ref:fisher_investments_energy)]
+Another US-heavy industry is Energy Equipment & Services,
+with major energy service firms like Schlumberger and Transocean
+contributing heavily to the industry ’ s weight. The industry is grow-
+ing outside the US but still remains a relatively small weight in most
+foreign benchmarks. [(:ref:fisher_investments_energy)]
+Within Emerging Markets, there are virtually no Energy service fi rms. The Oil & Gas Refi ning & Marketing sub-industry is a relatively small weight in all benchmarks except Emerging Markets, where it ’ s the second-largest weight. Geographically, most of these firms reside in emerging markets or the US. [(:ref:fisher_investments_energy)]
+{{:msci_acwi_15_largest_iocs.png?600|}}
+{{:msci_acwi_15_largest_pubtraded_epfirms.png?600|}}