Since Bacon & Woodrow and BGI initially proposed the idea of multinational equity benchmarks and FTSE International subsequently launched a series of indices, the debate about their suitability for institutional investors has intensified. Initial interest has been from UK pension funds, conscious of flaws in the current approach to international investment. The discussion has revolved around concentration and globalisation.

The problem of concentration is highlighted by Vodafone AirTouch, which represents more than 11% of the FTSE All-Share Index. It has been suggested that using a multinational index can help address this - Vodafone AirTouch represents under 3% of the FTSE Multinationals Index. However, several consultants have argued that given the complexity of a multinational structure (it necessarily leads to a quite different approach to equity management) this amounts to using a sledgehammer to crack a nut. In fact, there are easier solutions to this problem, notably the use of capped indices, improved diversification out of domestic equities into overseas equities in general or, specifically, a move towards European equities, perhaps considered in conjunction with the possibility of the UK's eventual membership of EMU. For example, the problem of concentration for Dutch and Finnish investors (in Royal Dutch and Nokia respectively) has substantially disappeared as they have moved towards a pan-European approach. In terms of concentration, therefore, multinational indices are probably not the answer.