Stoxx adds ‘Ocean Care’ and 5G indices to thematic offering

Oct 31st, 2019 | By | Category: ETF and Index News

Zurich-based index provider Stoxx has added two new indices to its thematic equity index offering.

Stoxx Thematic index launch

Stoxx has launched two new thematic equity indices.

The new indices are the EURO iStoxx Ocean Care 40 Index, which provides exposure to European companies that are leaders in ocean sustainability, and the Stoxx Global Next Generation Telecoms Index, which consists of firms globally that stand to benefit from the ongoing 5G revolution.

Ocean care champions

The EURO iStoxx Ocean Care 40 Index selects its constituents from the parent EURO Stoxx Index, which represents large, mid, and small-cap companies of 11 eurozone countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

Each company in the parent index is assigned an “Ocean Care” rating, based on an average of 13 performance indicators provided by ESG analytics firm Sustainalytics, which aims to assess companies’ efforts to protect waters and the environment.

These indicators analyse the firm’s environmental policy, biodiversity programs, hazardous waste management, oil spill disclosures, and carbon intensity, as well as the environmental impact of its supply chain.

Stocks are ranked in descending order by their market capitalization multiplied by their Ocean Care rating.

The two top-ranked companies from each of the 19 ICB Supersectors are selected into the index. To reach 40 constituents, the selection is completed with the two highest-ranked companies not yet included, each from a different Supersector.

Constituents are weighted according to the product of their market caps and their Ocean Care ratings. The index is reconstituted and rebalanced on a quarterly basis.

5G Revolution

The Stoxx Global Next Generation Telecoms Index selects its constituents from the globally diversified Stoxx Developed and Emerging Markets Index.

The parent index first undergoes an ESG screen using data from Sustainalytics whereby firms involved with controversial weapons or in breach of the United Nations Global Compact principles are removed.

Stoxx then harnesses FactSet’s Revere Business Industry Classification System (RBICS) to determine the aggregate percentage of each company’s revenue that is derived from 91 business sectors linked to the 5G theme.

These sectors include cellular site equipment, networking semiconductors, diversified satellite services, handheld and smartphone software, and data transport carrier services, among others. Companies must have at least 50% revenue exposure to these sectors to be eligible for selection.

Index constituents are weighted by the product of their market capitalization and their revenue exposure to the 5G theme. Reconstitution and rebalancing occur quarterly.

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