Matrix Funds Management has licensed the new Dow Jones Canada High Dividend 50 Index to underlie the Matrix Dow Jones Canada High Dividend 50 Fund. This open-end mutual fund was launched today by Matrix Funds Management.
The Dow Jones Canada High Dividend 50 Index, which was also launched today, couples a high-yield element counterbalanced with fundamentals-based factors that aim to target quality Canadian stocks and income trust units. The new index is designed to be the benchmark for high-yield equities in Canada.
“The Dow Jones Canada High Dividend 50 Index, with stock and income trust components selected for their fundamental strength relative to peers, clearly represents a benchmark for high yield in the Canadian market,” says Michael A Petronella (pictured), President of Dow Jones Indexes. “And, with Matrix Funds Management’s decision to use this new index as the underlying gauge for its Matrix Dow Jones Canada High Dividend 50 Fund, Dow Jones Indexes continues to enhance its global brand as one with a long track record of creating reliable, rules-based market-measurement tools.”
In addition to its licensing agreement on Matrix Funds Management’s new mutual fund, Dow Jones Indexes also licenses gauges for 16 exchange-trade funds in Canada, including those announced in May 2010, October 2009, and June 2009.
The starting universe for the Dow Jones Canada High Dividend 50 Index is The Dow Jones Canada Total Stock Market Index, which includes income trust units. From there, to create the eligible selection pool, stocks are subject to screens for size, liquidity, earnings and dividend yield. Stocks passing all screens are subsequently ranked by dividend yield from one to 100. They are further evaluated and ranked according to: dividend yield, three-year dividend growth, three-year earnings-per-share growth, dividend coverage ratio and capitalisation ratio.
The rankings are equal weighted to create a composite ranking, and the eligible securities are then re-ranked based on this composite ranking. Of that, the top 50 stocks are selected as index components.
Stocks in the index are weighted according by dividend yield, with a weighting restriction of 8% on individual securities. The Dow Jones Canada High Dividend 50 Index is reconstituted and rebalanced annually in December.