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iShares licenses Dow Jones Emerging Markets Select Dividend Index for new ETF


iShares has licensed the new Dow Jones Emerging Markets Select Dividend Index to serve as the basis for the iShares Dow Jones Emerging Markets Select Dividend ETF, listed on the London Stock Exchange.

The Dow Jones Emerging Markets Select Dividend Index, which was also launched today, is designed to measure the stock performance of 100 leading dividend-paying emerging markets companies, selected by dividend yield.

Dow Jones Indexes pioneered the dividend-index space with the launch of the Dow Jones US Select Dividend Index in 2003, and remains a leader in this area. Earlier in 2011, Dow Jones Indexes unveiled Europe and Eurozone Dividend Indexes, as well as distributing versions of dividend indexes for Europe, Eurozone, Germany and France.

“The launch of the Dow Jones Emerging Markets Select Dividend Index aims to address two notable themes generating increasing interest in the market recently: emerging markets and dividend-based investing,” says Michael A Petronella (pictured), President, Dow Jones Indexes. “We see this new index as an important tool for evaluating the equity performance of top dividend-paying stocks in emerging markets.”

With today’s announcement, Dow Jones Indexes has now licensed a total of 29 indexes to underlie ETFs so far in 2011 versus 19 in the comparable year-ago period.

Stocks in the starting index universe must pass a series of the eligibility screens to be included in the selection pool: they must have a non-negative trailing 12-month earnings-per-share figure, a float-adjusted market capitalisation of at least USD 250 million and a minimum three-month daily average trading volume of USD 2 million. The stocks also must have paid dividends during each of the past three years.

Stocks in the selection pool are then ranked in descending order of indicated annual yield, defined as a stock’s indicated annual dividend (not including any special dividends) divided by its price. The top 100 stocks are selected as index components. No more than 30 stocks can be selected from any single country.

Component weightings are assigned based on indicated annual yield. No single country can represent more than 25% of the index. The index composition is reviewed quarterly.

Calculation of the Dow Jones Emerging Markets Select Dividend Index began on 29 September, 2011. Real index history is available daily from this date forward. Back-tested historical data have been calculated daily back to 30 December, 2005, the date at which the index base value is set at 1000. The index is calculated in price return and total return. The total return version of the index is calculated with net dividends reinvested.


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