Stoxx launches global 3D-printing index as investor interest in sector booms

Apr 19th, 2013 | By | Category: ETF and Index News

Stoxx, a leading provider of financial market indices, has introduced the Stoxx Global 3D Printing Tradable Index. The new index tracks the performance of companies that generate revenues directly from the revolutionary 3D-printing sector.

Stoxx launches global 3D-printing index as investor interest in sector booms

3D printers have the potential to revolutionise all manner of industries and are rightly attracting a great deal of interest from investors.

The index has been specifically designed to underlie exchange-traded funds (ETFs) and other investable products, and will enable investors to participate in the performance of the booming 3D-printing industry.

Described by US President Barack Obama as “the next revolution in manufacturing”, 3D Printing (also known as additive manufacturing) is the process of making virtually any shape from a digital model. The technology has wide applications across numerous industries, including jewellery, footwear, industrial design, architecture, engineering and construction, automotive, aerospace, healthcare and education.

Effectively, 3D printers are like modified ink-jet printers that deposit successive layers of material until a 3D object is built up. As an additive process (as opposed to subtractive), they typically use a fraction of the material needed when machining a part from bulk. The material used for printing can be plastic, metallic powder, clay or even organic cells.

To ‘print’ an object, a computer-aided design (CAD) file is first required, along with instructions on how to lay down the successive layers of material. The object can be designed on a computer using CAD software, or files of standard objects can be downloaded from open source archives. Equally, a CAD file can be created by a 3D scanner, which copies the measurements of an existing object.

Hartmut Graf, chief executive officer of Stoxx, said: “The 3D printing sector is thriving and gathering a lot of attention – many claim it will be the next internet.”

Indeed, investors have already begun to recognise the potential of the technology, with stocks in 3D-printing companies soaring over the past year. NYSE-listed 3D Systems Corporation, for example, a pure-play 3D-printing specialist, has posted a return of 101% in the past 12 months, putting it firmly among the year’s best performers.

“With the launch of the Stoxx Global 3D Printing Tradable Index, we offer market participants an innovative and strictly rules-based tool to participate from the performance of this booming sector. By adding several screens to the methodology, Stoxx ensures a comprehensive representation of the sector, as well as maximum tradability of the index,” added Graf.

The underlying security universe for the new index is defined as all constituents of the Stoxx Global Total Market Index, which currently covers 65 countries and over 7,000 securities. To be included in the index, companies must pass a set of screens. First, more than 1% of their revenues must be generated from the 3D-printing sector (in reality, many of the index’s constituents are heavily geared to the 3D-printing sector and generate a far larger proportion of revenue from it than the 1% minimum requirement). Second, companies must have a minimum three-month average daily trading volume of €250,000 and a minimum free-float market capitalisation of €80 million. Third, they must be listed in a country that is classified as a developed market according to Stoxx’s country classification model.

Stoxx Global 3D Printing Tradable Index

Stoxx Global 3D Printing Tradable Index, 12-month performance +65.03%.

All companies that meet these requirements are ranked by free-float market capitalisation, and at maximum the largest 30 companies will be selected for inclusion in the index. Currently, the index includes 10 companies that passed all screens, which are equally weighted to avoid concentration risk. Constituents include names such as Dassault Systems, 3D Systems, Stratasys, Proto Labs and Greatbatch.

The index is available in price, net and gross return versions, and calculated in euros and US dollars. Constituents are reviewed annually in September and rebalanced quarterly. Daily history is available back to September 17, 2010. The index has performed very strongly and is up 65% over the past 12 months.

An alternative to Stoxx’s new offering is provided by Structured SolutionsSolactive 3D Printing Index. This index offers exposure to companies with significant business operations, as defined by a committee composed of staff from Structured Solutions, in the 3D-printing industry (hardware or software). It currently has seven constituents, all equally weighted, including 3D Systems, Arcam, Autodesk, Cimatron, Exone, Proto Labs and Stratasys.

As yet, no ETF is linked to either of these indices. However, given investors’ interest in the sector and the potential returns on offer, it might just be a matter of time before such a product is launched.

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