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Elements exchange-traded note lets slip the Dogs of the Dow

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Dow Jones Indexes has announced the licensing of the Dow Jones High Yield 10 Total Return Index, a subset of the Dow Jones Industrial Average, to Elements, a new exchange-traded note platf

Dow Jones Indexes has announced the licensing of the Dow Jones High Yield 10 Total Return Index, a subset of the Dow Jones Industrial Average, to Elements, a new exchange-traded note platform. The ‘Dogs of the Dow’ Elements is issued by Deutsche Bank and is traded on the NYSE Arca electronic platform.

The Dow Jones High Yield Select 10 Total Return Index measures the top 10 companies in the Dow Jones Industrial Average based on indicated annual dividend yield, a strategy commonly referred to as the Dogs of the Dow, and which typically consists of holding these 10 Dow stocks for one year. Dividends are reinvested into the index and contribute to its overall level.

‘Dow Jones Indexes adds transparency to the widely used ‘Dogs of the Dow’ strategy by applying a consistent index methodology and publishing monthly watch lists,’ says Michael Petronella, president of Dow Jones Indexes.

‘Licensing this unique index as the basis for an ETN will give market participants broad and easy access to the performance of the top-yielding components in the Dow Jones Industrial Average.’

The High Yield Select 10 Index is calculated using an equal-dollar weighted methodology. Each component stock is initially given equal weight in the index in December, after the components have been selected, and are allowed to change over the course of the year based on fluctuations in stock prices.

A watch list for the indices is published monthly to indicate which stocks may be included in the High Yield Select 10 Index when it is rebalanced at the end of the year. Dividend yield for each component is calculated based on updated indicated annual dividend data and the closing prices on the last trading day of the previous month.

Beyond Dow Jones’s well known equity indexes, the company maintains a number of alternative indices, including benchmarks for the hedge fund and commodity markets.

Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average, the index provider also is co-owner of the Dow Jones Stoxx pan-European indices and together with Wilshire Associates provides the Dow Jones Wilshire Global Index family, which covers more than 12,000 securities in 59 markets.

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