Standard & Poor’s has launched a new index to track US-listed foreign securities. The benchmark is based on ADRs, or American Depositary Receipts.
The S&P ADR Index, says S&P, is an investable index designed to let active portfolio managers benchmark the performance of their international portfolios and enable domestic investors to add international equity exposure to their portfolios via US exchange-listed securities. It will also allow portfolio managers to create passive portfolios based on the shares on non-US companies.
The new index was created in conjunction with JP Morgan – the creator of the ADR instrument. “For pension plans restricted from purchasing foreign shares by regulations such as Taft-Hartley, replicating this index will be a particularly valuable tool for gaining blue-chip international equity exposure through domestic instruments,” saiys Robert Shakotko, managing director of S&P Index Services.
S&P says it was speaking to other parties about licensing, and hoped soon to offer investors a variety of investment vehicles linked to the S&P ADR Index. The high liquidity of the index’s underlying components meant that it lent itself particularly well to the creation of investment products that track it, the company said.
The index includes all foreign-domiciled companies that are members of the S&P Global 1200 Index, and that have eligible equity-linked instruments listed on a US exchange. It is market-cap weighted. At launch, the index includes 261 securities from 26 markets.
Its top 10 constituents are BP, GlaxoSmithKline, Novartis, HSBC Holdings, Royal Dutch Petroleum, Vodafone, TotalFinaElf, AstraZeneca, Nokia and Shell Transport & Trading Company.