Dow Jones Indexes: Wikis

  
  

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Dow Jones Indexes
Type Subsidiary of Dow Jones & Company, which is a subsidiary of News Corporation.
Founded 15 Wall Street, New York (1882)
Founder(s) Charles Dow, Edward Jones, Charles Bergstresser
Headquarters New York City
Parent Dow Jones & Co.
Website [1]

Dow Jones Indexes (DJI) was formed in 1997 as an entity within Dow Jones & Co. It produces, maintains, licenses and markets indexes as benchmarks and as the basis of investible products such as exchange traded funds (ETFs), mutual funds and structured products. The company currently has employees in 17 cities worldwide, including Princeton, NJ, New York, Boston, Chicago, Los Angeles, London, Frankfurt, Paris, Madrid, Stockholm, Singapore, Hong Kong, Beijing, Mexico City, São Paulo, Santiago and Dubai (its latest office). Dow Jones is owned by News Corp.

An index follows a certain market and gives investors a single number to summarize its ups and downs. It is a means by which the world's institutional (and retail) investors can track a market without having to buy the underlying components. It is a convenient way for someone interested in a broad, narrow or extremely narrow group of securities to track them.

Pension funds and other money managers often use indexes as benchmarks. This means that "active" investors (those who pick various securities to buy and hold for their returns) track their own returns against a benchmark index (an index that typifies its market) to see if they are out- or under-performing that market. Investors who do not want to do this (those who buy into indexes or securities that use indexes as their basis) are called "passive" investors. They are known to link their portfolios to the broad market and to not try to outguess conventional market wisdom. Passive investors argue that almost no active investors can beat the overall markets in the long-term.[1]

Dow Jones' best known index is the Dow Jones Industrial Average, which was created in 1896. The oldest index in use is the Dow Jones Transportation Index, which was created in 1882 by Charles Dow, founder of The Wall Street Journal.

Contents

Indexes

The DJI has over 130,000 indexes, though a lot of these are not used by many people. Most are equity (stock) indexes, but also fixed-income, futures, options, private equity, commodity, currency and other alternative asset class indexes. Dow Jones Indexes says that all its products are maintained according to clear, unbiased and systematic methodologies that are fully integrated within index families.

DJI has a faith-based and a socially responsible investing (SRI) indexes - a relatively new trend in investing. In 1999, it launched the world’s first Islamic index: The Dow Jones Islamic Market (DJIM) indexes. DJI opened an office in Dubai in April 2008 to expand its presence in the Gulf region.

DJI and SAM Group, launched the Dow Jones Sustainability Indexes in 1999, these indexes track performance of sustainability-driven companies around the world. There are currently 70 DJSI licensees held by asset managers in 16 countries to manage a variety of financial products, including active and passive funds, certificates and segregated accounts.

DJI partnered with AIG to create the Dow Jones-AIG Commodity Index. It tracks trades on futures contracts for physical commodities, like energy (petroleum, gas), precious metals (gold, silver), industrial metals (zinc, copper), grains (corn, wheat), livestock (pork bellies), among others. They are traded in a variety of currencies.

UBS Securities LLC has acquired AIG Financial Product Corp.'s commodity business as of May 6, 2009. As such, the Dow Jones-AIG Commodity Indexes have been re-branded as the Dow Jones-UBS Commodity Indexes effective May 7, 2009.

The Dow Jones Select Dividend Indexes reflects the performance of leading dividend-yielding stocks. It includes global and regional indexes. It was DJI's first fundamentals-driven index.

Dow Jones Indexes also does "specialty" indexes for specific markets or interests. It has the Dow Jones U.S. Economic Stimulus Index, the Olympic-inspired Dow Jones Summer/Winter Games, the race-car centric Dow Jones Formula 1 Index and the closely followed Dow Jones Luxury Index. Companies can also request that specific indexes be created to suit their clients' interest or for publicity purposes. This is popular with smaller asset management and public relations firms.

Recent history

In March 2008, Chicago Climate Exchange, Inc. (CCX), the world's first and North America's only voluntary, legally binding integrated greenhouse gas emissions reduction, registry and trading system, announced that Dow Jones Indexes and SAM Indexes had granted CCX a license for the Dow Jones Sustainability World (DJSI World) and Dow Jones Sustainability North America Indexes (DJSI North America). The contracts are listed on CCX's wholly – owned subsidiary Chicago Climate Futures Exchange (CCFE), the world's leading environmental derivatives exchange. They trade emissions credits and DJI makes the indexes that are based on them.

In July 2008, DJI partnered with Brookfield Asset Management (BAM) to develop the Dow Jones Brookfield Infrastructure Indexes. This index series was designed to serve as benchmarks of companies that own and operate key infrastructure assets, like toll roads, pipelines and ports.

DJI launches an average of one index or index family per week. It often creates an index for a specific event (i.e. Dow Jones 2008 Summer Games Index, launched December 2007), a specific market (Dow Jones Luxury Index, launched June 2008) or a very small market (Dow Jones Cyprus Titans 10 Index). In some instances it cooperates with other entities to create a custom index (Barron’s 400 Index, launched September 2007).

In July 2007, the Iowa Peace officers Retirement System has adopted the Dow Jones Wilshire Index Family (now called the Dow Jones Total Stock Market Indexes; see below). These indexes are popular benchmarks for pension funds looking to minimize risk and market exposure. They used the Dow Jones Wilshire 5000sm (now called the Dow Jones U.S. Total Stock Market Index), to benchmark its equity investment portfolio.

In August 2008, News Corp. Chairman Rupert Murdoch announced a new worldwide benchmark index – the Global Dow. It will comprise 150 stocks around the world that will include large companies in established markets, but also rising stars in emerging markets as well as companies specializing in new technologies. Murdoch made the announcement in Mumbai, India, emphasizing its global outlook.

Dow Jones Industrial Average historical data (along with several other major indexes) recently became available on a new website, www.djaverages.com. The company also has a widely-read quarterly newsletter called Insights that covers the industry. The current issue as well as back issues are available at http://www.djindexes.com/insights/.

In April 2009, Dow Jones rolled out the Dow Jones Total Stock Market (TSM) Indexes. They were designed to provide comprehensive coverage of the U.S. equity market. It's flagship index was intended to be the Dow Jones U.S. Total Stock Market Index, an all-inclusive measure composed of all U.S. equity securities with readily available prices. It is sliced according to stock-size segment, style and sector to create distinct sub-indexes that track every major segment of the market. DJI claims that the indexes were created and maintained according to an objective and transparent methodology with the fundamental aim of providing reliable, accurate measures of U.S. equity performance.[2]

On June 1st, 2009, DJI changed the components of the famous benchmark Dow Jones Industrial Average. It cut Citigroup and GM - both of which were trading at or under $1 per share (and both of which, after receiving Federal bailout money, were practically government wards). They were replaced by insurance giant Travelers and IT pioneer Cisco Systems.

Later that month, Dow Jones Indexes announced a joint marketing agreement with LVA Indices (Chile, [3]) and Proveedor Integral de Precios (PIP) to create a new series of corporate and government fixed income indexes called Dow Jones Latixx Indexes [2]. It started with dozens of Mexican and Chilean bonds, with plans to move into Costa Rica, Peru, Argentina, Brazil, Colombia and Venezuela. If you go to its www.latixx.com website, then go to About Us, and then Video, there is a mini-infomercial in English. The Spanish version of the site has the same video in Spanish. The video is also up on Youtube: [3].

In July 2009, Javelin Investment Management created the first US-based Islamic ETF: JETS Dow Jones Islamic Market International Index Fund (JVS on the NYSE). It is based on the DJIM International Titans 100 Index.

Dow Jones Indexes was named Most Innovative ETF Index Provider 2009 for the Americas by exchangetradedfunds.com

In October 2009, the Dow Jones GCC Titans 50 Real Return Index became the basis for the first exchange traded fund (ETF) in the United Arab Emirates (UAE). The licensee is National Bank of Abu Dhabi (NBAD). The index measures the performance of 50 leading component stocks traded in the six Gulf Cooperation Council (GCC) member states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. [4]

That same month, DJI launched DJIM Greater China Index. It has been licensed to ETFs in Malaysia and other countries.

November 2009: Charles Schwab licensed five Dow Jones Total Stock Market (TSM) Size and Style indexes for exchange traded funds. It is "Chuck's" first proprietary line of ETFs.

In that same month, the Dow Jones Industrial Average was licensed by Simplex Asset Management in Japan to underlie an ETF. This is the first time the DJIA was licensed to a Japanese ETF. It launched in December 2009.

In January 2010, DJI announced that the Dow Jones Corporate Bond Index would serve as the basis of the first fixed-income exchange-traded note (ETN) available in Israel. This was the first time the index has been licensed as the basis for an exchange-traded product globally. The ETN is sponsored by Harel SAL, a subsidiary of Harel Finance, and is available on the Tel Aviv Stock Exchange (TASE).

In addition to the Dow Jones Corporate Bond Index, Dow Jones Indexes licensed the Dow Jones Brazil Titans 20 Index as the basis for an ETN that was listed at the TASE.

On February 10, 2010, Dow Jones and CME Group announced an agreement to form a joint venture to operate a global financial index services business. The definitive agreement is set to provide for CME Group to own 90% of the venture to which Dow Jones will contribute its Dow Jones Indexes business valued at $675 million. Dow Jones is expected to hold the remaining 10% and retain a key role in the management of the Dow Jones Industrial Average. CME Group will contribute a business which provides certain market data services said to be valued at $607.5 million to the joint venture. The new joint venture will also raise approximately $613 million in third-party debt which will be used to pay a $607.5 million distribution to Dow Jones.

The deal is expected to close in the 1st quarter 2010 since it passed regulatory clearance. [5]

On March 4, 2010, Dow Jones Indexes signed a memorandum with The Global Fund to Fight AIDs, Tuberculosis and Malaria to explore the creation of a family of indexes that could be licensed as the basis for investment products. The first is expected to be called the Dow Jones Global Fund 50 Index, which would most likely focus on Blue Chip stocks.

Both The Global Fund and Dow Jones Indexes hope to benefit from this collaboration. The Global Fund wants to further strengthen its engagement with the private sector and bring to bear the power of financial markets to help its efforts around the world. The Global Fund is a leading multilateral financing organization in global health with commitments with more than US$19 billion to date. Dow Jones Indexes intends to add to its range of socially-conscious indexes that will complement its increasingly diverse range of products. [6]

Awards

  • Sh. Mohammed Rashid Bin Makhtoum Award for Innovation in Islamic Finance (2003)
  • CERT Award for Excellence in Islamic Finance (2004)
  • Deloitte/KLIFF Award for Special Contribution to Islamic Finance (2005)
  • Failaka Islamic Fund Award for Best Contribution & Development to Islamic Funds (2005)
  • Contribution to Islamic Capital Market Development (IIFF, 2006)
  • Sh. Mohammed Rashid Bin Makhtoum Award for Contribution by Western Institution to Islamic Finance (2006)
  • American Muslim Achievement Award (Islamic Center of Southern California, 2006)
  • Best Individual Contribution to Islamic Finance (KLIFF, 2007)
  • April 2006 - Dow Jones Indexes won Failaka Islamic Fund Awards 2005 for the Best Contribution to Growth & Development of Islamic Funds.
  • November 2006 - Dow Jones Indexes was named "Index Provider of the Year, Asia" by the U.K.-based magazine Structured Products and based on the votes of an independent judging panel. The award recognizes Dow Jones Indexes' work in the index field.
  • December 2007 - Dow Jones Indexes won the "Best Islamic Index Provider" category of the inaugural Master of Islamic Finance Awards by Terrapin Ltd. The award recognized the wide market acceptance of the Dow Jones Islamic Market Index series and Dow Jones Indexes’ leadership and commitment to providing benchmarks for Shari’ah-compliant stocks and bonds.
  • June 2008 - Dow Jones Indexes was named the "Most Innovative ETF Index Provider of 2007" for the Americas at the 4th annual Global ETF Awards hosted by Exchangetradedfunds.com. Dow Jones Indexes won on the basis of unique index offerings such as the Dow Jones Islamic Market Indexes and Dow Jones – AIG Commodity Indexes.
  • June 2008 - Dow Jones Indexes won two awards for its Dow Jones Islamic Market Index Family. Global Finance magazine named the global index provider "Best Shari'ah – Compliant Index Provider". The award will be conferred during an awards ceremony on October 13, 2008 at the National Press Center in Washington. Furthermore, Dow Jones Indexes received the "Global Recognition for a Financial Institution Award". The award was presented at the International Islamic Finance Forum in Dubai.
  • December 2008 - Named "Most Outstanding Islamic Index Provider of the Year" at the 5th KLIFF Islamic Finance Awards 2008 held in Kuala Lumpur, Malaysia.
  • January 2009 - Named the "Best Islamic Index Provider" by Islamic Finance News. The selection was made by a record 1,502 Islamic finance professionals worldwide.
  • April 2009 - Named "Best Shari'ah-Compliant Index Provider" by Global Finance magazine for the second consecutive year.[4]
  • June 2009 - Dow Jones Indexes was named Most Innovative ETF Index Provider 2009 for the Americas by exchangetradedfunds.com (web site of the Chicago Board Options Exchange). [www.exchangetradedfunds.com]
  • December 2009- Named "Best Index Provider Shari'ah compliant Indexes" by Dubai-based Islamic Business & Finance magazine.
  • January 2010- Named “Best Islamic Index Provider” in the Islamic Finance News (IFN) award poll for the third consecutive year.
  • January 2010 - Asia Asset Management Awards 2009 names DJI winner of Index Provider of the Year in Asia.

See also

References

External links








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