Deutsche Börse has expanded its index offering further by launching the DAXglobal Water Index. The firm says this will track the world’s largest and most liquid companies from the water industry. Deutsche Börse has also launched seven new short indices, which investors can use as a hedge against falling prices in the emerging markets.
The DAXglobal Water Index contains companies from the water supply, irrigation and sewage disposal sectors that are traded on international stock exchanges. Each company represented in the index must generate at least 30% of its income in these sectors, according to the firm.
At present, the water index contains 26 companies, the three largest being the Spanish company Aguas Barcelona, Veolia Environnement from France and UTD Utilities from the UK. At 33%, UK stocks make up the largest percentage of the index, followed by the USA (13%), Malaysia (11%), Spain and France (8% each) and Hong Kong (5%). A back-calculation of the index’s performance shows 32% for 2007 and 24% for 2006.
Selection criteria for the DAXglobal Water Index are market capitalisation and the average daily exchange turnover for the last six months. The index is calculated as a price and performance index in euros, US dollars and pounds sterling. The index composition is reviewed once a year. Rebalancing is undertaken on a quarterly basis.
Deutsche Börse has also added seven new DAXglobal short indices to its offering. The performance of the short indices is directly opposed to that of their counterparts: DAXglobal Asia, DAXglobal China, DAXglobal Emerging11, DAXglobal Russia, DAXglobal Russia+, DAXglobal BRIC and DBIX, which tracks Indian companies. If, for example, the DAXglobal China Index falls by 5%, the DAXglobal China Short Index rises by 5%, and vice versa.