JSE Launches FTSE/JSE Equally Weighted Top 40 Index
July 02, 2010
JOHANNESBURG, 1 July 2010 – Today the Johannesburg Stock
Exchange (JSE) and global index provider FTSE Group (FTSE) announce the launch
of the FTSE/JSE Equally Weighted Top 40 Index. The new index adds to the
existing FTSE JSE Index Series, providing an alternative to indices constructed
according to the market values of the companies (or market capitalisation
weightings). It is also the first equally weighted index to be launched in South
Africa within the FTSE/JSE Index Series.
Aimed at fund managers globally, the introduction of the FTSE/JSE Equally
Weighted Top 40 Index will extend the FTSE/JSE Africa index range and provides a
variation from existing indices, allowing greater risk diversification and
benchmarking for performance, particularly in equity portfolios. The majority of
FTSE/JSE indices are market-cap based, with a few indices based on company
fundamentals. “For some time FTSE and JSE have realised the existence of market
demand for an equally weighted top 40 index. Current market conditions require a
tool that allows for all companies to be considered on an even playing field,”
says Ana Forssman, Senior General Manager of Information Product Sales.
“The new index provides the South African market with an exciting new
investment opportunity, as well as raising visibility for South Africa amongst
the international investor community,” says Jonathan Cooper, Managing Director
Middle East and Africa, FTSE Group. “By providing a range of innovative
strategies, FTSE is dedicated to enhancing both the level of choice and
opportunities for investor diversification. We shall continue to build upon our
work with the JSE to ensure we meet market demand.”
As with the FTSE/JSE Top 40 Index, the FTSE/JSE Equally Weighted Top 40 Index
consists of the largest 40 companies on the JSE but unlike the FTSE/JSE Top 40
Index and other market capitalisation indices, all constituent companies have
the same weighting and therefore the importance of each company in the index
does not depend on its market capitalisation.
"Equal weighted indices give investors better access to all stocks in a
particular segment," says Forssman. "If there's strength across a segment,
products tracking equal weighting indices tend to outperform, but investments
tracking market-cap weighting indices can do better depending on the market's
leadership.” Forssman adds that investors could find that products based on the
FTSE/JSE Equally Weighted Index are a useful aid in reducing the risk associated
with the sudden drop in share price in large cap companies. Both institutional
and retail investors can look forward to products tracking this index launching
soon.
The FTSE/JSE Equally Weighted Top 40 Index follows the
construction of the existing FTSE/JSE Top 40 index with regard to quarterly
index reviews, constituents’ eligibility and constituent price data. The
constituents of this index will therefore always reflect the constituents of the
FTSE/JSE Top 40 index.
FOR FURTHER INFORMATION PLEASE CONTACT:
Roz
Thomas/Victoria Williams
Corporate Communications Consultants
Tel: (011)
463 2198
Email: victoria@corpcom.co.za / rozt@corpcom.co.za