Standard & Poor’s, the world’s leading index provider, announced today that it has launched an equal weighted version of the S&P/TSX 60, the primary large cap benchmark for the Canadian equity market. The S&P/TSX 60 Equal Weight Index has the same constituents as the market capitalization weighted S&P/TSX 60, but each company in the equally weighted version is allocated an equal weight at each quarterly rebalancing. When compared to its underlying counterpart, the S&P/TSX 60 Equal Weight Index offers higher exposure to relatively smaller companies, lower exposure to larger companies and a different risk/return profile.
S&P Indices also announced today that it has licensed BetaPro Management Inc. (“BetaPro”), to list and trade an ETF based upon the S&P/TSX 60 Equal Weight Index.
“By design, equal weighted indices give greater importance to smaller-cap companies than traditional market-cap weighted indices,” says Steve Rive, Managing Director at S&P Indices. “As a result, equal weighted indices will have different risk/return profiles and different sector exposures than their market-cap brethren.”
At each quarterly rebalancing, every constituent in the S&P/TSX 60 Equal Weight Index is assigned an equal weight. Between rebalancings, as stock prices move, the respective constituent weightings in the Index will deviate from the equal weight target. While these deviations could be reduced through more frequent rebalancing, the result would be a much higher level of turnover in the index, leading to higher trading costs for index users. Therefore, the Index is rebalanced quarterly to coincide with the quarterly share adjustments of the S&P/TSX 60, which take place after the close of the market on the third Friday of each quarter. Quarterly rebalancing allows the Index to strike an appropriate balance between turnover and the goal of equal weighting.
The S&P/TSX 60 Equal Weight Index is a member of the S&P/TSX Equal Weight Index Series. For more information on the Index, please visit: www.standardandpoors.com/indices.
About S&P Indices
S&P Indices, the world’s leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1 trillion is directly indexed to Standard & Poor’s family of indices, which includes the S&P 500, the world’s most followed stock market index, the S&P Global 1200, a composite index comprised of seven regional and country headline indices, the S&P Global BMI, an index with approximately 11,000 constituents, and the S&P GSCI, the industry’s most closely watched commodities index. For more information, please visit www.standardandpoors.com/indices.
About Standard & Poor’s
Standard & Poor’s, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor’s is an essential part of the world’s financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.
Standard & Poor’s does not promote, market, sell or endorse any product based upon its indices.
SOURCE Standard & Poor’s