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MSCI NUAM Index Explained: How Chile, Colombia and Peru Are Combined
The Latin American Investor’s Guide to MSCI Andean Stock Selection
Valeria Morote
·4 min read
What the MSCI NUAM Index is meant to do
The MSCI NUAM Index is designed to track the combined equity markets of Chile, Colombia and Peru. For Latin American retail investors, that makes it a useful shorthand for how three Andean stock markets can move together in one benchmark. It is not a tradable asset itself, but it helps investors, fund managers and analysts compare performance and build products tied to the region.
Which stocks can enter the index
MSCI starts with the equity universe of Chile, Colombia and Peru, then applies its own investable market rules. All companies already inside the MSCI Chile IMI (ECH), MSCI Colombia IMI (COLO) and MSCI Peru IMI (EPU) are included, while other eligible securities can also join if they clear minimum size and liquidity tests.
Those tests look at full market capitalization at the company level, free float-adjusted market capitalization at the security level, free float, and liquidity. In plain terms, MSCI wants stocks that are large enough, tradable enough, and available enough for international investors to buy in the public market.
Why free float and liquidity matter
Free float is the part of a company’s shares that can actually be traded by investors. If a stock has a big market value on paper but very few shares available to the public, it is harder to include in a broad index that aims to reflect real investable exposure.
Liquidity matters for the same reason. MSCI uses measures such as the 3-month and 12-month Annual Trade Value Ratio, plus the frequency of trading, to check whether the stock changes hands often enough. That helps reduce the risk of putting too much weight on names that look attractive on paper but trade thinly in practice.
How MSCI decides who gets in
The methodology sets different thresholds for new securities and existing constituents. New names need to clear higher bars than stocks already in the index, which is MSCI’s way of keeping the benchmark stable while still allowing fresh entrants when they are large and liquid enough.
There is also a foreign inclusion factor rule. In simple terms, MSCI checks whether enough of the shares are available for international investors. For Peru, foreign listings can also be eligible under the global investable market methodology, which matters because some companies trade through structures that are more common outside the local exchange.
How the index is weighted
The MSCI NUAM Index is weighted by free float-adjusted market capitalization. That means bigger companies with more shares available to the market usually carry more influence in the index, while smaller names have a lower impact.
For investors, this is important because the index will naturally lean toward the largest investable names in the three countries. It does not treat every stock equally, and it does not try to guess which company will perform best next quarter.
How often the index changes
MSCI reviews the index every quarter, in line with its broader global investable market review calendar. That means the list of constituents can change four times a year, depending on whether companies still meet the selection rules.
The review process uses specific cut-off dates for market cap and liquidity data, usually about nine business days before the review becomes effective. For retail investors, the practical point is simple: index changes do not happen every day, and MSCI gives advance notice before they take effect.
What happens when corporate events occur
The index also follows MSCI’s corporate events methodology. If a company in the parent Chile, Colombia or Peru IMI gets added, deleted, spun off, acquired or suspended, the MSCI NUAM Index generally mirrors that change when the event is implemented.
This keeps the benchmark aligned with the underlying markets. For example, a spun-off company can enter the index when the event takes effect, while a constituent under prolonged suspension can be removed after a defined period. MSCI also keeps the door open for mergers, acquisitions and other changes in company characteristics at the next scheduled review.
Why Latin American investors should care
The MSCI NUAM Index is more than a technical rulebook. It can shape ETFs, mandates and other investment products that give investors access to Andean equities, so its methodology matters for anyone who wants exposure to Chile, Colombia and Peru through one benchmark.
For a retail investor, the key takeaway is that MSCI is trying to build a benchmark made of stocks that are investable, liquid and relevant. That does not remove market risk, and it does not guarantee returns, but it does create a clearer framework for understanding how the region is represented in global portfolios.
Legal Notice: Education, not advice. Past results do not guarantee future returns. Investing always involves risks.
