STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today introduced the STOXX Global 1800 EM Exposed Index. The new index represents those companies within the STOXX Global 1800 Index that derive a substantial part of their revenues from Emerging Markets countries, thus providing exposure to these growing markets through liquid securities.
The STOXX Global 1800 EM Exposed Index is designed to act both as a proper benchmark for actively managed funds, and as an underlying to exchange-traded funds and other investable products.
“With the launch of the STOXX Global 1800 EM Exposed Index, we are offering market participants a tool that enables them to participate in the rapid growth of Emerging Markets, while at the same time having the comfort of investing in highly liquid and tradable Developed Markets securities,” said Hartmut Graf, chief executive officer, STOXX Limited. “The innovative new index concept is based on a strictly rules-based selection process that only utilizes publicly available data, and thus adds to the overall high transparency of this index.”
The aim of the STOXX Global 1800 EM Exposed Index is to identify those companies in the underlying STOXX Global 1800 Index that generate a substantial part of their revenues in countries that are not classified as Developed Markets under STOXX’s Market Classification scheme.
The index universe for the new index is the STOXX Global 1800 Index. All companies within the index universe are screened for the geographic allocation of their revenues. In a first step, all companies’ geographic revenue splits are collected from their annual reports. The percentage of the respective regional revenues generated from Emerging Markets countries is then determined. To do so, STOXX uses the publicly available United Nations Commodity Trade Statistics Database (UN Comtrade), which contains manufactured goods exports data on each country. In a first step, it is determined how much of each company’s revenues, reported by region (as opposed to single countries), is derived from non-developed markets. Then a final exposure number is computed from these percentages
Should a company not report their revenues split by regions, its exposure is approximated by a ratio of the exports from the country that the company is based in, to the sum of the country’s GDP and imports, which is then multiplied by the global EM exposure of that country. For companies that do not report sales in their home country, revenues in the home region outside of the home country are calculated by dividing the country’s exports to home region by the sum of the country’s GDP and imports. In order to only include companies in the STOXX Global 1800 EM Exposed Index which have a significant part of their revenues from non-developed markets, a final exposure threshold of 33% is set. All companies with a final exposure score that is higher than this are selected as index components, and weighted by a combination of free-float adjusted market capitalization and exposure.
The STOXX Global 1800 EM Exposed Index is calculated in price, net and gross return versions and available in Euro and U.S. dollars. The index is reviewed annually in September, using the latest available data from annual reports and UN Comtrade.
For more information, please visit www.stoxx.com.