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Solactive launches UK domestic index

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Solactive AG has launched the Solactive UK Domestic Index, which tracks UK listed companies whose revenues are primarily generated within the UK. The index targets investors who are interested in the UK domestic market. 

The UK is the second largest market in Europe in terms of GDP and this index enables investors to focus on a basket of companies that are less dependent on international revenues. 

Other major UK-focused indices include a large number of multinational companies that are not generating income domestically. This is especially the case for listed companies in the energy and mining sectors whose revenues are mainly derived from operations outside the UK. As a matter of fact, the top 20 companies by market cap listed on the London Stock Exchange have an average UK-based revenue of 18 per cent, with only one company generating all of its income in the UK and approximately a third of them generating less than 5% of the revenues domestically. Therefore, the performance of major UK indices is influenced by companies who do not necessarily depend on the state of the UK economy for their revenue generation. The Solactive UK Domestic Index instead gives investors the opportunity of being more directly exposed to the UK domestic market. 

Henning Kahre (pictured), Head of Research, Solactive AG, says: “London is one of the most important financial centers in the world and a listing on the LSE is therefore an attractive gateway to capital markets. That is especially true for international companies in the energy & mining space that are most often not UK companies in a traditional sense but that are still included in UK benchmarks due to listing. The new Solactive Index on the contrary provides investors with true exposure to the UK economy.”
 
The index incorporates the 50 UK listed (LSE) companies with the highest share of total revenue generated in the UK. The Solactive UK Domestic Index is equally-weighted and it is a Net Total Return index, meaning that dividends are reinvested into the index after deduction of withholding tax. 

The composition of the index is re- adjusted semiannually. The index is calculated in GBP and is based on 100 index points at the close of trading on 17 December 2010. The index is published on Solactive website, Bloomberg (SOLUKDON Index) and Reuters (SOLUKDON). RBC Capital Markets will be offering exposure to the performance of the Index through a variety of products such as swaps, notes and certificates linked to the index. 

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