Solactive rolls out Swiss equal-weight blue-chip index

Aug 7th, 2015 | By | Category: ETF and Index News

Solactive, a Germany-based index provider, has launched the Solactive Swiss Equal-Weight Net Total Return Index, an index which tracks the performance of an equally weighted allocation of Swiss large-cap stocks.

Solactive rolls-out Swiss equal-weight index

Steffen Scheuble, CEO of Solactive

In contrast to market capitalisation-weighted indices, which weight constituents based on the market value at which they are currently trading, equal-weighted indices sever the link between valuation and weight.

This strategy avoids the possibility of overly concentrated positions in highly valued stocks which can occur in market cap-weighted indices.

According to research from UBS, investing with an equal-weight approach has shown to exhibit attractive long-term risk and return properties versus traditional market-cap weighted indices. This is due to the larger relative exposure to value and smaller-sized companies. Also known as risk-premiums, this bias to value and small size companies has historically been rewarded.

The index selects the top 20 stocks, according to market capitalization, listed and domiciled in Switzerland which have a 3-month average daily volume of CHF 5 million or more. The index is rebalanced on a quarterly basis.

 

The index has been constructed so as to be suitable to underlie index-linked investment products such as exchange-traded funds and structured products. Initially, the first licensing of the index has been to UBS as the reference for a structured product available on the SIX Structured Products Exchange.

Steffen Scheuble, CEO of Solactive, commented: “We are pleased to fill in another gap in the market for UBS, with the launch of this equal-weight index following the Swiss market via its top 20 blue chips, which offers a new approach to a well-known market.”

Dominik Gottet, an equity derivatives specialist at UBS, added: “With our UBS Open End PERLES certificate on the Solactive Swiss Equal-Weight Index we provide an equity-linked participation in Switzerland’s 20 largest companies by market capitalization while ensuring a highly flexible, up-to-date positioning thanks to quarterly rebalancing. Additionally, the equal weighting of the index provides higher diversification and prevents concentration risk, due to a lower weight of the three Swiss heavyweights Nestlé, Novartis and Roche.”

The Solactive Swiss Equal-Weight Index is a net total return index calculated and published in CHF.

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