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S&P Dow Jones Indices, a leading provider of indices to the exchange-traded funds (ETF) industry, has introduced a suite of nine new indices covering the South African equity market.
The suite is headlined by the S&P South Africa Composite, an index which measures the performance of companies actively traded and listed on the Johannesburg Stock Exchange (JSE).
The index includes both foreign domiciled and domestic domiciled companies listed on the JSE with float-adjusted market values of $100 million or more and annual dollar value traded of at least $50 million.
This headline index serves as the basis for the remaining eight indices in the suite, which includes a number of “smart beta” strategies offering high dividend, low volatility and equal weight exposures, as well as large-cap, completion, Sharia and weight-capped versions.
Two of the indices, the S&P South Africa Dividend Aristocrats and S&P South Africa Low Volatility, have been licensed to Grindrod Bank, a commercial bank and asset manager based in South Africa, for potential ETF development.
The S&P South Africa Dividend Aristocrats Index is designed to measure the performance of constituents within the S&P South Africa Domestic index that have followed a policy of increasing or maintaining stable dividends for five consecutive years. Part of the popular S&P Dividend Aristocrats series of indices, the index maintains a focus on dividend growth over pure dividend yield.
The S&P South Africa Low Volatility Index is an extension of S&P Dow Jones Indices’ closely followed low volatility family. The index measures the performance of the 40 least volatile stocks from the S&P South Africa Composite. The hallmark of the S&P Low Volatility Index family is the simplicity in design, as its methodology employs a volatility-driven weighting scheme that weights constituents relative to the inverse of their realized volatility, with the least volatile stocks receiving the highest weights.
Vinit Srivastava, Senior Director at S&P Dow Jones Indices, commented: “S&P Dow Jones Indices is very excited to launch the S&P South Africa Composite and this new series of indices, bringing greater index based measurement and transparency to the South African market and its investors. In addition, the launch of the S&P South Africa Dividend Aristocrats and the S&P South Africa Low Volatility Index represent the first time that investors here will be able to measure the performance of long-time dividend payers and low volatility issues.”
Gareth Stobie, head of capital markets at Grindrod Bank, said: “Grindrod Bank intends to add two new smart beta ETFs to its Gtrax suite of ETFs, both of which will be aligned to both the low volatility and dividend aristocrat themes. These themes have proven to be enormously popular with investors abroad. We are excited to provide South African investors with access to these strategies on the local exchange through Grindrod Bank.”
The full line-up of indices is as follows:
S&P South Africa Composite
S&P South Africa Composite Capped
S&P South Africa Dividend Aristocrats
S&P South Africa Low Volatility Index
S&P South Africa 50
S&P South Africa 50 Equal Weight
S&P South Africa Completion
S&P South Africa Composite Shariah
S&P South Africa Composite Shariah Capped