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How do you prevent survivorship, selection, or reporting biases in your data?


Our indices do not suffer from survivorship, selection, or other reporting biases that are so common in private market data. Briefly, the following biases are prevented accordingly:

  1. Survivorship biases: When the companies we track go bankrupt or default on their existing debt obligations, we remove such companies from our indices by imposing a -100% return, thus avoiding any survivorship bias due to companies that underperform and may disappear. We also have other rules in place to deal with different kinds of corporate actions that companies may go through.

  2. Selection biases: Our index constituents are selected through a rigorous methodology, the key principles of which include focusing on companies that are representative of each country and activity, are large relative to the companies we track in the Universe, and for which we can reliably compute the factor loadings. Thus, no subjective or performance criteria are imposed on any of them, avoiding selection biases that may be common with other vendors.

  3. Reporting biases: We altogether avoid reporting biases as our index constituents are not reliant on being part of any private fund that contributes data. However, we also ensure that companies that form part of our index universe are those that are likely investable by private funds. We achieve that by focusing on countries that are attractive for PE/VC investments, countries with lower Foreign Direct Investment restrictiveness, and also eliminate countries that are entirely owned by governments or are subsidiaries of publicly listed companies.

Further Reading

For further details on our methodology and how these biases are avoided, please refer here.

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