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Dow Jones Global Select Dividend Index to underlie ETF for the first time

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Global index provider Dow Jones Indexes has licensed the Dow Jones Global Select Dividend Index to First Trust Portfolios as the basis of an exchange-traded fund launched on the American S

Global index provider Dow Jones Indexes has licensed the Dow Jones Global Select Dividend Index to First Trust Portfolios as the basis of an exchange-traded fund launched on the American Stock Exchange.

This is the first time the Global Select Dividend Index, which was launched in October and tracks the performance of the top 100 dividend-paying companies worldwide, has been licensed to underlie an ETF.

‘Demand for the Dow Jones and Dow Jones Stoxx Select Dividend Indexes by the global investment community has grown substantially since we first launched the Dow Jones U.S. Select Dividend Index in 2003,’ says Dow Jones Indexes president Michael Petronella.

‘To satisfy this demand we have expanded this index family to track high-yielding stocks in North America, Europe and the Asia-Pacific region, the latest being the Dow Jones Global Select Dividend Index. To date there are 14 ETFs globally based on our select dividend index series.’

To be eligible for inclusion in the Global Select Dividend Index, a component must have a positive dividend growth rate over the past five years and a dividend-to-earnings per share ratio of no more than 60 per cent for US and European companies and 80 per cent for all other countries. Each stock also must have a minimum three-month daily average trading volume of USD3m.

Each company’s weight in the index is based on its indicated annual dividend yield. The indicated annual dividend yields for all components are totalled, and each component’s weight is equal to its share of the total dividend yield. However, the weight of individual components is restricted to 10 per cent in order to prevent the index from being dominated by a single high-dividend paying stock.

The Global Select Dividend Index is reviewed annually in December. Price and total return indices are calculated in US dollars. Daily historical index values are available back to December 1998, with a base value set at 100.

The Dow Jones and Dow Jones Stoxx Select Dividend Index series consists of the Dow Jones Stoxx Select Dividend 30 Index, Dow Jones Euro Stoxx Select Dividend 30 Index, Dow Jones Stoxx Nordic Select Dividend 20 Index, Dow Jones Stoxx EU Enlarged Select Dividend 15 Index, Dow Jones Stoxx Americas Select Dividend 40 Index, Dow Jones Stoxx Asia/Pacific Select Dividend 30 Index, Dow Jones Stoxx Global Select Dividend 100 Index and the Dow Jones Select Dividend Indexes for Asia, Asia/Pacific and EPAC regions.

Best known for the Dow Jones Industrial Average, Dow Jones Indexes also is co-owner of the Dow Jones Stoxx indexes, the world’s leading pan-European indexes, and together with Wilshire Associates, provides the Dow Jones Wilshire Global Index family, which is anchored by the Dow Jones Wilshire 5000 and covers more than 12,000 securities in 59 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. The firm also maintains a number of alternative indices, including benchmarks for the hedge fund and commodity markets.

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