4Featured IndexesDow Jones Indexes Launches New Indexes for EuropeDow Jones Indexes is in the midst of expanding its suite of European indexes. As the firm's Senior Director of International Markets and Products, Deborah Ciervo could not be more pleased. "Our client base in Europe is continually seeking new and innovative indexes," she says. "These new indexes are designed to meet their needs." Starting in May of this year, Dow Jones Indexes began a concerted effort to build out index series for the Europe and Eurozone markets. The first of the offerings included new blue-chip indexes: the Dow Jones Europe Titans 80 IndexSM and the Dow Jones Eurozone Titans 80 IndexSM. In September, the firm introduced a range of dividend-focused and risk-based indexes. Deborah explains that the company had built a substantial European index presence with the former partners at STOXX. Following Dow Jones Indexes' sale of its interest in that venture, her team is dedicated to reestablishing a new set of robust European index families. Summarizing the company's efforts, she says: "Europe represents a critical component in our strategic business plan and our future. Overall, we're focused on aligning our product development efforts with our clients' objectives."Creating and expandingDeborah notes that Dow Jones Indexes already had a large portfolio of European-based indexes before the recent additions. The Dow Jones Titans IndexesSM included 11 indexes for individual European markets when the Europe and Eurozone indexes launched in May. And the Dow Jones Total Stock Market IndexesSM and the Dow Jones Global IndexesSM include full families of European country, regional, size-segment and sector indexes. The firm also has historically offered indexes for Europe that are beyond the "plain vanilla" variety, she says, with an emphasis on thematic and strategy indexes. She continues by saying that the company has built a strong brand in the region and around the world, with well-known benchmarks that are used in a variety of financial products. The Dow Jones Brookfield Infrastructure IndexesSM, for example, which are designed as a "pure-play" measure of the infrastructure sector, include a Europe-focused index. Likewise, the highly regarded Dow Jones Sustainability IndexesSM include a full complement of European measures. Tapping into current themesDeborah explains the new indexes launched in September aim to tap into current investment themes. "With markets as uncertain as they've been of late, investors are looking to diversify their risk," she says.Deborah CiervoSenior Director of International Markets and Products, Dow Jones Indexes"Europe represents a critical component in our strategic business plan and our future. Overall, we're focused on aligning our product development efforts with our clients' objectives."
5In that vein, one of the company's first priorities was to expand its Dow Jones Select Dividend IndexSM series to include European-region indexes in response to growing demand for more robust dividend-focused strategies. The family already included a number of country-specific indexes for Europe, and the time was right to complement those with regional indexes. Companies are selected for the indexes using several fundamental factors to identify high-quality dividend leaders: dividend growth, earnings growth and return on equity. A second series of indexes also has a dividend-based theme. "Our new 'distributing' indexes are the first of their kind. They're designed to offer greater transparency into that portion of index returns that can be attributed to dividends," Deborah says. She goes on to explain that the index is designed to provide greater insight as to how dividends paid by an index's constituent companies can impact index returns. The new calculation methodology was applied to indexes in the Dow Jones Select Dividend IndexSM family, including the new Europe and Eurozone indexes, as well as indexes for France and Germany.Volatility is another key theme addressed by these new indexes. Risk is on everyone's minds, says Deborah, due to volatile markets around the globe, and in Europe in particular. That is why Dow Jones Indexes launched the Dow Jones Volatility Risk Control IndexesSM, including the Dow Jones Europe Titans 80 Volatility Risk Control IndexesSM and the Dow Jones Eurozone Titans 80 Volatility Risk Control IndexesSM. Each series includes several variants at volatility increments of 5% (the most conservative), 10%, 15% and 20% (the most aggressive)."These indexes use a risk-control overlay on the underlying indexes," she explains. "Each index uses a rebalancing formula to maintain the target risk level. When market volatility exceeds the target level, the index automatically allocates part of its weighting to cash. When the volatility is below the target level, that cash allocation is reduced accordingly."Tools for growthDeborah points out that with these new indexes, Dow Jones Indexes now offers a complete toolkit for following the European markets. When asked if the company has plans for future growth, she replies in the positive. She explains that the current range of offerings, while already robust, is considered to be a "basis from which we plan to expand.""Our European clients have been asking for more indexes and more innovation. We're continually working on niche concepts and ideas to try to meet their needs." Deborah explains that the growth of passive investing is helping to drive this new push. "Clients are seeking a wide array of alternative indexes and multi-asset class products to complement traditional active portfolios. So we're constantly challenged to come up with new index concepts in an effort to meet these demands." Pointing to a Quarter 2, 2011, report compiled by asset management giant BlackRock, Deborah notes that for the first half of this year, there were 1,185 ETFs in Europe with assets under management of US$321.2 billion. This compares with 961 ETFs with US$218.0 billion in assets under management for the same period in 2010. European-listed ETFs took in US$19.2 billion in new assets in the first half of the year, with more to come in the second half."Our indexes serve as both benchmarks and the basis for a variety of products in this region," she says. "We believe there will continue to be plenty of growth opportunities."For more information on our new indexes for Europe, visit: >> www.djindexes.com/focuseurope"With markets as uncertain as they've been of late, investors are looking to diversify their risk."