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S&P launches new indices based on equity research top stock picks

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Standard & Poor’s Index Services has launched two new Stars indices that offer investors exposure to the most highly rated stock picks of S&P’s equity research analysts in Europe a

Standard & Poor’s Index Services has launched two new Stars indices that offer investors exposure to the most highly rated stock picks of S&P’s equity research analysts in Europe and the US.

The S&P U.S. Stars Index and S&P Europe Stars Index aim to measure the performance of stocks within the S&P Composite 1500 (U.S. Stars) and S&P Europe 350 (Europe Stars) indices that are currently rated 5-Stars or 4-Stars by Standard & Poor’s equity research services.

The S&P Europe Stars Index contains 25 large-cap European stocks that in the view of the firm’s equity research analysts may outperform the S&P Europe 350 index over a 12-month time horizon.

‘Standard & Poor’s equity research already provides independent equity research to clients at some of Europe’s leading investment houses and is widely recognised as a leading source of fundamental, qualitative-driven analysis across the region,’ says Eudald Canadell, managing director of Standard & Poor’s index services in Europe.

‘This new index will enable a wider range of investors to gain exposure to the bottom-up analysis of S&P’s European equity research team and their track record of delivering superior value through changing market cycles, while retaining the hallmarks of independence, transparency and integrity for which Standard & Poor’s has become renowned.’

US and European equities ranked 5-Stars (Strong Buy) or 4-Stars (Buy) by S&P analysts are expected to outperform the S&P 500 and S&P Europe 350 respectively. The U.S. Stars Index is designed to reflect the performance of these recommendations within the Composite 1500 universe, while the Europe Stars Index is designed to reflect the performance of these recommendations within the Europe 350 universe.

Both indices are comprised primarily of 5-Stars stocks, but may also include 4-Stars stocks when certain conditions warrant. The US and Europe Stars indices offer a passive means of tracking active security selection value generated by S&P’s equity research analysts. Both indices are equal-weighted, with constituents reviewed and reweighted every month. The new indices compliment the three existing sets of S&P All Stars Baskets, which focus on high growth potential stocks in the US, Europe and Asia.

S&P Stars have been awarded since 1987 for US equities and since 2002 for European equities based on their potential for future performance. Under the proprietary Stars (STock Appreciation Ranking System) methodology, S&P equity analysts rank stocks according to their individual forecast of a stock’s future total return potential versus the expected total return of a benchmark based on a 12-month time horizon. Rankings range from 5-Stars (Strong Buy) to 1-Stars (Strong Sell).

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