STOXX Limited, a provider of tradable and global index concepts across a number of asset classes, has added yet another index to its portfolio, iSTOXX Europe Demography 50 Index, which has been licensed to Credit Suisse.
The new index provides a representation of companies from sectors that will be impacted by demographic changes, which include not just aging populations but also changes to the structure of families. Moreover, the index selects those companies from the STOXX Europe 600 Index that are impacted by such changes, and which pay high dividends and display low volatility.
The new index will therefore be able to identify what industries will be positively impacted by demographic changes.
The new index identifies sectors that will be positively impacted by demographic changes.
Commenting on the design and composition of the index, Hartmut Graf, Chief Executive Officer of STOXX Limited, said: “Our new index is a rules-based and transparent tool that offers market participants access to sectors that are influenced by demographic changes, and in addition adds dividend and volatility screens.”
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“The results of the overall continuing increase in life expectancy has many effects – one of them being the positive impact on certain industry sectors due to the changing behaviour of older age groups. The sophisticated iSTOXX Europe Demography 50 Index methodology identifies these sectors, which include amongst others the financials, leisure & luxury and pharmaceuticals.”
Demographics is widely misinterpreted and misunderstood, with a narrow view relating it to ‘age only’ or to ‘people count only’.
Credit Suisse intends to use the new index as the basis for structured products. Amlan Roy of Credit Suisse’s Demographics & Pensions Research reflects on this significance of demographics: “Demographics is widely misinterpreted and misunderstood, with a narrow view relating it to ‘age only’ or to ‘people count only’. We believe it is about people characteristics—consumers and workers. Consumers are revenue sources, and workers are costs, and within this interpretation they affect the income statements and balance sheets of every country.”
He adds: “Demographic changes are not very predictable as they include behaviour. They are not just long-term, as Greece youth unemployment and ageing Japan/Germany are affecting economic and macro fundamentals in the here and now.”
In July, STOXX Limited launched two new EURO iSTOXX indices, adhering to a new weighting scheme that is not only relegated to a free-float market cap. And back in March, the company also launched daily currency-hedged indices based on a cascade of existing STOXX offerings.