Dow Jones Indexes, a leading global index provider, today announced enhancements to the methodology of the Dow Jones Global and U.S. Total Stock Market indexes as well as the Dow Jones Global Index.

Effective with the open of trading on September 20, offshore-companies with a primary listing on a U.S. stock exchange will be eligible to be included in the Dow Jones U.S. Total Stock Market Index.

This modification addresses the consequences of a change in U.S. tax law, whereby a number of offshore-companies with a primary U.S. listing decided to transfer their domicile of incorporation to other financial centres such as Ireland and Switzerland.  Previously, the companies were included in the index of the country to which they transferred their incorporation.

As a result, the indexes tracking those countries’ markets no longer provided an accurate measure of local equities trading because of the inclusion of non-local companies.  Also effective with the open of trading on September 20, companies that are listed on the Korean Securities Dealers Automated Quotations (KOSDAQ), a trading board of the Korea Exchange (KRX) in South Korea, will be eligible to be included in the Dow Jones Global and Dow Jones Global Total Stock Market indexes. Currently, Dow Jones Indexes includes stocks from the Korea Stock Exchange, the stock market division of KRX. As of July 16, 2010, there are 966 companies listed on KOSDAQ, which will be screened for inclusion. These companies have a free-float market capitalization of approximately $41 billion.  The Dow Jones Global Total Stock Market Index provides comprehensive coverage of the world’s equity markets with a consistent rules-based methodology.

The Dow Jones Global Index family is a comprehensive global index series designed to provide a complete range of portfolio-management and benchmarking tools.  Included in the Dow Jones Global Total Stock Market Index universe are common shares and other securities with the characteristics of common equities from countries that provide accessibility to nonresidents and availability of real-time and historical market data.

To produce the investable securities universe, the equities included in the broad market are screened to exclude securities without readily available prices. Companies that survive this analysis have their shares outstanding adjusted for “float,” which is those shares readily available for trading by investors.  The Dow Jones Global Index universe is defined as all equity securities in 51 countries. The Dow Jones Global Index family covers only those countries that are accessible to nonresidents and that provide access to real-time and historical market data. Eligible for selection are all equity securities that trade on the major exchanges of these countries, screened for liquidity (no more than ten non-trading days in the three months prior to selection). For Emerging Market countries with significant barriers to direct foreign investment, Dow Jones Indexes may opt to include in the indexes those issues directly listed on U.S. exchanges, such as Depository Receipts (DRs) and other types of offshore listings.

About Alex Akesson

Alex has been specializing in hedge fund and alternative investment news since April 2006. Working mainly in research and manager interviews, she has published breaking news on the hedge fund industry on her blog, as well as several industry publications. Her access to hedge fund managers gives her insight into news stories as well, and the ability to track press releases and other breaking news in real time.
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