S&P Dow Jones focuses on long-term value creation with index launch

Jan 21st, 2016 | By | Category: ETF and Index News

S&P Dow Jones, a leading global index provider, has announced the launch of a new index designed to track the performance of companies meeting high standards of financial quality and value creation with a focus on long-term objectives.

S&P Dow Jones focuses on long-term value creation with index launch

Alex Matturri, CEO of S&P Dow Jones Indices.

The S&P Long-Term Value Creation (LTVC) Global Index debuted at the World Economic Forum in Davos, Switzerland, on 21 January 2016, and is hoped to highlight the enhanced benefits to shareholder value compared to companies pursuing short- or medium-term strategies.

“Over the past few years, there has been an intensifying investor demand for a benchmark that captures companies that take a long-term approach in making business decisions,” said Alex Matturri, CEO of S&P Dow Jones Indices. “The launch of the S&P LTVC Global Index is a manifestation of the long-termism concept with an independent and transparent approach. We are proud to leverage our deep indexing knowledge to facilitate awareness and education for market participants.”

The index combines a quantitative assessment of the drivers of long-term investment returns (return on equity, balance sheet accruals ratio and leverage ratio) with a qualitative analysis of the effectiveness of the firm’s corporate governance structure. Strong performance in these areas has historically been linked with the sustainability of key competitive advantages enjoyed by firms within their industry.

The index utilises economic dimension scores provided by RobeccoSAM, an investment specialist focused exclusively on sustainability investing, to meet its qualitative analysis objective. Economic dimension scores are derived from investigating the firm’s activities in relation to brand management, codes of conduct & compliance, corporate governance, innovation management, and risk & crisis management.

The Canada Pension Plan Investment Board (CPPIB), a co-founder of the ‘Focusing Capital on the Long Term’ (FCLT) initiative, worked collaboratively with S&P DJI to develop the index.

Mark Wiseman, President and CEO CPPIB, commented: “We are proud of the role our investment teams played in the development of this innovative new index from S&P DJI, as part of CPPIB’s ongoing work to advance longer-term behaviours in capital markets today. We believe this index has the potential to act as a real catalyst to encourage a greater focus on factors that contribute to long-term value creation by both corporate management and investors, all to the ultimate benefit of individual savers and beneficiaries.”

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