STOXX Limited, introduced the STOXX Global Extended Infrastructure 100 and STOXX Global Infrastructure Suppliers 50 indices. The new indices are designed to act both as a proper benchmark for actively managed funds, and to underlie exchange-traded funds and other investable products, to enable investors to participate from the performance of the booming infrastructure sector.…
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The STOXX Global Extended Infrastructure 100 Index represents companies that generate their revenues directly from the infrastructure sector or companies that supply goods or services to it, while the STOXX Global Infrastructure Suppliers 50 Index represents only the supplier companies.
“The infrastructure sector is currently thriving and expected to continue to do so over the next decades. Amongst other factors, this is due to developing countries catching up to developed ones in terms of infrastructure standards, an overall shifting demography and a global trend towards greener and cleaner innovations,” said Hartmut Graf, chief executive officer, STOXX Limited. “With the launch of the STOXX Infrastructure Indices, we offer market participants two innovative tools to participate from the performance of this booming sector. By including not only infrastructure companies but also suppliers to the sector, the new indices provide a wide diversification, while at the same time offering the well-known and transparent STOXX methodology.”
The STOXX Infrastructure Indices offer various advantages. First, studies have shown that the stock prices of infrastructure suppliers and their customers are highly correlated. The STOXX Global Extended Infrastructure 100 Index also better captures those infrastructure companies that are typically difficult to represent. For example, the Water Utilities sector has a very low degree of privatization, and in order to offer market participants exposure to this sector, the index includes its suppliers.
The index universe for the STOXX Infrastructure Indices is defined as all stocks in the STOXX Global Total Market Index minus Chinese A-shares, which currently covers 53 countries. Currently, this is the largest country coverage among infrastructure indices in the market. To be included in the indices, companies must pass a complex set of screens. First, based on research by Revere Data, LLC, all companies in the STOXX Global TMI that generate revenue directly from the infrastructure business and those that supply it, are identified. Revere Data, LLC, is a leading provider of global sector classification, analyzing companies’ lines of business, their key business relationships and their sources of revenue by geography. To enhance liquidity and tradability of the indices, a minimum three-month average daily trading value (ADTV) of 1 million U.S. dollars is then required for companies to be included in the indices. Next, the remaining companies are grouped into eleven infrastructure-specific sectors: Midstream, Wireline, Cable & Satellite, Rail, Road, Air, Water, Passenger Transportation, Energy, Water Utilities and Waste Management. In the STOXX Global Extended Infrastructure 100 Index, the top seven stocks by free-float market-capitalization from each of the above infrastructure-specific sector are selected as index components, and the remaining stocks are selected by free-float market-capitalization, irrespective of their sector belonging. In the STOXX Global Infrastructure Suppliers 50 Index, it is the top four stocks from each sector that are selected, with the remaining stocks being selected by free-float market-capitalization. In both indices, sectors’ weights are capped at 20%, which automatically leads to a component capping of 20%. A components level capping is triggered should the second largest component hit a 15% weight mark in order to ensure UCITS III compliance of the indices.
The STOXX Infrastructure Indices are weighted by free-float adjusted market capitalization, available in price and net return versions, and are calculated in Euro and U.S. Dollars (USD). They are reviewed annually in March and rebalanced quarterly. Daily history is available back to December 31, 2004.
Source: ETFWorld – STOXX