Free-float weighting sizes each stock in an index by the market value of its publicly tradable shares, excluding shares locked up by founders, governments, or strategic holders. It gives a truer picture of what investors can actually buy and sell. On the NGX, where insider holdings often exceed 50%, the difference between full-cap and free-float weighting is dramatic.
The All-Share Index weights every listed company by its total market capitalisation, counting every share as if it could be bought tomorrow. That's fine for a company where 90% of shares trade freely. It's misleading for a company where a founding family or the government holds 70% and has no intention of selling.
On the NGX, this isn't a corner case. It's the norm. Dangote Cement's strategic holdings represent a massive proportion of its shares outstanding. BUA Group controls a supermajority of BUA Cement and BUA Foods. Multiple banking stocks have significant locked-up holdings. The ASI treats all these shares as available, inflating these companies' index weights and distorting the benchmark's representation of the investable market.
Free-float weighting starts by identifying what percentage of each company's shares are genuinely available for public trading. Shares held by founders, controlling families, governments, locked-in employee schemes, and cross-holdings are excluded. The remaining 'free float' is multiplied by the share price to get the free-float market cap, and that figure determines the stock's weight in the index.
If Company A has a total market cap of N1 trillion but only 20% of shares trade freely, its free-float market cap is N200 billion. If Company B has a total market cap of N500 billion with 80% free float, its free-float market cap is N400 billion. Under full-cap weighting, Company A would have twice the index weight. Under free-float weighting, Company B would have twice the weight. The difference in portfolio construction is substantial.
Venoble's VNG-EQB (Free-Float Equity Benchmark) is a daily index that weights Nigerian equities by their free-float market capitalisation. It draws on VCORE's ownership database, which tracks strategic holdings, insider positions, and lock-up structures across all NGX-listed securities.
VNG-EQB has constituent data going back to 2008, with 22 to 68 constituents depending on the period. The index is rebalanced to reflect changes in ownership structure, new listings, and delistings. Because it weights by float rather than full cap, VNG-EQB produces materially different sector and stock weights than the ASI, giving a more accurate picture of the opportunity set available to actual portfolio managers.
A portfolio manager benchmarked to the ASI might hold 15% in a stock that represents 15% of the index by full-cap weight. But if that stock's free float is only 10% of shares outstanding, the manager is trying to build a 15% position in a stock where 90% of shares don't trade. The result is price impact, illiquidity, and difficulty rebalancing.
Free-float weighting aligns the benchmark with reality. Stocks that are hard to trade in size get smaller weights. Stocks with deep, liquid order books get larger weights. This makes the benchmark replicable, meaning a fund manager can actually hold the portfolio without distorting prices. For Nigerian equities, where the gap between total and free-float capitalisation is often enormous, this isn't a minor adjustment. It fundamentally changes what the benchmark looks like.
Free-float weighting sounds simple in theory, but executing it for Nigerian stocks is surprisingly difficult. You need accurate, up-to-date ownership data for every listed company. On the NGX, this information is scattered across annual reports, SEC filings, proxy statements, and exchange disclosures. It isn't aggregated anywhere in a structured, machine-readable format.
That's precisely the problem VCORE solves. Venoble's database tracks ownership structures with source citations from primary documents. When a major shareholder sells a stake, or a new strategic investor appears, the float figure updates accordingly. Without this kind of infrastructure, free-float weighting is just a concept. With it, you can build indices and portfolios that reflect the market as it actually trades.
Free float is the proportion of a company's shares that are available for public trading, after excluding shares held by founders, governments, and strategic investors. It matters because many NGX-listed companies have very low free floats, sometimes under 20%. That means most shares never trade, and the stock's weight in the ASI overstates its importance to actual investors. Free-float weighting corrects this by sizing stocks according to what you can actually buy.
No. The NGX All-Share Index uses full-capitalisation weighting, counting every outstanding share regardless of whether it's available for trading. This inflates the index weight of companies with large strategic holdings and misrepresents the investable market. Most major global indices, including the S&P 500, FTSE 100, and MSCI indices, switched to free-float weighting years ago. The ASI hasn't made this transition, which is one reason alternative benchmarks like Venoble's VNG-EQB exist.
VNG-EQB weights constituent stocks by free-float market capitalisation rather than full-cap. It also applies eligibility criteria based on liquidity and data availability. The result is an index where highly traded stocks with large public floats carry more weight, and thinly traded stocks with concentrated ownership carry less. The sector and stock weights can differ substantially from the ASI, giving a more accurate picture of what a portfolio manager can actually replicate in the market.
There's no single public source that aggregates free-float data for all NGX stocks in a structured format. Annual reports disclose major shareholders, and the NGX publishes some ownership information, but it's fragmented and often outdated. Venoble's VCORE database tracks free-float figures with source citations from primary documents across 200+ securities. Bloomberg and EODHD provide some float data, but accuracy for Nigerian small- and mid-caps is unreliable.