Dow Jones Indexes started calculating 15 MicroSector Indexes in June. These are narrow-based equity indices that include five of the largest and most actively traded stocks in each sector.
They are derived from industry groups and subgroups of the group’s global classification standard comprising the Dow Jones global indexes. A selection list for each index is created from the top 10 eligible stocks in the group ranked by market cap, dollar volume and options volume. The OneChicago futures exchange began trading futures.
Mike Petronella, president of Dow Jones Indexes, says: “These narrow-based indices are highly correlated to their broader industries and give market participants an effective tool to plan sector rotation strategies.” He adds that additional industry groups are anticipated and that the indices will underlie cash options offered at the Chicago Board Options Exchange.
The 15 groups are: aerospace, banks, biotechnology, communications technology, diversified financial, electric utilities, diversified industrial, investment services, major oil companies, pharmaceuticals, precious metals, retail, semi-conductors, software, hardware and equipment.