FTSE, the third largest provider of equity indices to exchange-traded funds (ETFs), has announced the launch of the FTSE UK Digital Services Index Series, which will act as a reference and benchmark of UK companies operating in the digital sector.
The new index series includes companies that operate in a B2C digital capacity as well as those serving B2B digitally.
Indices will be calculated based on the FTSE All-Share and the FTSE AIM benchmarks, as well as a composite index of both FTSE All-Share and FTSE AIM constituents.
A company is eligible for the index series if it derives more than 50% of its revenues from either digital or online services, or if it is considered to be engaged in providing services that are integral and critical for the functioning of digital services.
FTSE has widened the definition of what constitutes an internet service business, so that it includes companies that operate in a B2C digital capacity as well as those serving B2B digitally. This means that less than 50% of the index is made up of software and technology companies, with weightings in key service areas such as travel and leisure, media and general retailers making up more than 25% combined.
Mark Makepeace, Chief Executive Officer, FTSE Group, said: “FTSE continues to develop innovative indexes for markets in the UK and across the globe. Our inventive approach is reflected in the UK Digital Services Index Series, which takes a fresh look at the internet service sector. FTSE has created a digital index that is not comprised of only software and technology stocks, but provides a true picture of the great breadth of industries in the UK that the internet has revolutionised.”
Sectors included in the new indices are software & computer services (31.4%), technology hardware & equipment (17.6%), travel & leisure (11.8%), fixed line telecommunications (9.8%), media (9.8%), mobile telecommunications (7.8%), general retailers (3.9%), financial services (2.0%), food & drug retailers (2.0%), non-life insurance (2.0%) and support services (2.0%).
The indices are appropriate for use as both performance benchmarks for actively managed funds and as underlying reference indices for passively managed index-linked investment products such as ETFs.