As part of its Titans series, Dow Jones Indexes has introduced a narrow UK equities index. The benchmark – the Dow Jones UK Titans 50 Index – is based on blue-chip companies whose headquarters are in the UK.
It is calculated in both sterling and US dollars and is weighted to take account of freely floated market capitalisation.
The index provider said that with its 50 highly liquid stocks, the index would be easy to use as the basis for investment products. Even though it contains fewer stocks than rival indices, the Dow Jones UK Titans 50 Index has performed strongly against its peer group. Between January 1992 and April 2001, based on historical data, the index would have posted a cumulative return of 248.07% against 234.39% for the FTSE 100 and 218.47% for the MSCI-UK Index, Dow Jones says.
Licensees for the new index are expected to be announced in the coming months.
“The Dow Jones UK. Titans 50 Index offers much lower costs for managers and investors looking to track the UK blue-chip equities market,” says Michael Petronella, managing director of Dow Jones Indexes. He said that coupled with the Dow Jones Euro Stoxx 50 Index, the Dow Jones UK Titans 50 Index provided an easy and efficient way to capture the whole UK and European equities market.
At the end of March, the free-float adjusted market capitalisation of the Dow Jones UK Titans 50 Index was £1bn, which equates to 71.2% of the market capitalisation of the Dow Jones UK Total Market Index.
Weightings in the UK index are capped at 10% to prevent any individual company dominating. Weights of the components are reviewed every quarter.
The index is available on a real-time basis through major market data vendors.