GLOBAL - FTSE Group and Global Wealth Allocation today launched a new series of wealth weighted indices which represent a significant shift away from the tradition of providing equity indexing based on market capitalisation.
The FTSE GWA Series contains nine indices with weightings of stocks allocated according to how much wealth the company generates, rather than by its market capitalisation.The FTSE GWA UK index is comprised of the same stocks as the FTSE All-Share.
Analysis of the index shows a return of 33.1% over a five-year period beginning September 2000 compared to a FTSE All-Share return of 5.8% over the same period, according to FTSE.
“Wealth weighting is an attractive proposition for long term investors,” said Mark Makepeace, chief executive, FTSE Group and David Morris, chief executive, GWA, in a joint statement. “During the research phase for these indices, we discovered a large commercial appetite for the concept.”
Licenses to create financial products based on the FTSE GWA series have been issued to Legal & General and SSgA.
The top ten companies in the UK by wealth are: Royal Dutch Shell, BP, Vodafone, HSBC Holdings, Royal Bank of Scotland, Barclays, HBOS, GlaxoSmithKline, Anglo American, BHP Billiton respectively.
The top ten by market cap are: BP, HSBC Holdings, Vodafone, GlaxoSmithKline, Royal Dutch Shell, Royal Bank of Scotland, AstraZeneca, Barclays, HBOS and Lloyds TSB respectively.
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