FTSE International has been making some changes lately to keep up with the ever-shifting market and the ever-changing needs of investors (also see article, p. 3).
In March, during the quarterly review of its indexes, it replaced nine of the components of its widely followed FTSE 100 index, the largest number of companies to be switched since that index's launch in the 1982. The companies removed were primarily food, utility and construction companies such as PowerGen and Allied Domecq. The new additions are mostly technology and telecommunications companies including Internet service provider Freeserve, computer manufacturer Psion and phone company Cable and Wireless Communications.
In February, FTSE announced that it would begin calculation of capped versions of the FTSE 100 and FTSE All-Share indexes. The suggested limit for an individual stock in the new capped indexes is 10%. To avoid confusion with the uncapped indexes, they will have their own separate brand name and a different index value. Initially calculating these indexes at the end of each business day, FTSE expects to eventually provide the capped version of the FTSE 100 in real time.
The new indexes are meant to accommodate index fund managers prevented from allowing any one security to represent more than 10% of their entire portfolio (see p. 44).
FTSE also has taken steps to further update its relatively new classification system with the introduction of a "retailers e-commerce" subsector. It will consist of retailers who conduct the majority of their business via the Internet or other electronic systems. Companies up for inclusion in the new subsector include Amazon.com, eBay, Gameplay.com and QXL.com.
The new classification is the result of a debate among the members of the FTSE Classification Committee in which it was concluded that e-tailers should be categorized separately from other types of retailer. FTSE anticipates that the new subsector will eventually become a full-sized sector as e-commerce continues to grow.
Late in 1999, FTSE relaunched its own set of Islamic indexes (the series had originally debuted in January 1999, but was not incorporated into the FTSE family of indexes until November). The FTSE Global Islamic Series is the joint effort of FTSE International and The International Investor (TII), a wholesale investment bank that targets investors seeking investments that are acceptable under the principles of Islam.
TII's shari'ah board screened the FTSE World Index's universe of about 2,400 stocks to identify a global index of over 1,000 qualifying stocks.
The series includes five regional subindexes for the Americas, Europe, the Pacific Basin and South Africa.
TII also distributes two Islamic small-cap indexes for Europe and the US that are not included in the FTSE family of indexes.
Dow Jones Indexes launched its Dow Jones Islamic Market Indexes in February 1999; they now include the benchmark global index and six subindexes.
TII is not the only company collaborating with FTSE. The index provider recently teamed up with the Madrid Stock Exchange to create an index for Madrid's new Latibex exchange, which is intended to give Latin American companies and European investors more exposure to each other. Companies included in the exchange must have a capitalization of more than 300 million euros and be listed on a primary exchange with reasonable transparency requirements. The exchange opened in December 1999 with 5 companies. As of March 9, 2000, the number had grown to 11.
This Index Fund Wanted 'Free'
What's in a name? The Securities and Exchange Commission apparently fears there can be quite a lot.
StockJungle.com sought to make waves in the mutual fund industry by offering a free S&P500 index fund. The fund, which was launched in November, was originally supposed to have the words "free" or "no fee" in its name. The annual expenses attached to the fund were projected at about 0.5% of assets, but StockJungle.com was picking up the tab. The company hoped to recoup its losses through advertising fees from its Web site, fees from its other mutual funds, and joint ventures with financial intermediaries. One of the purposes of the free fund was to draw investors to the other funds offered by StockJungle.com.
However, the SEC said no to announcing the fund's expense-free nature in its name. Their fear, according to Michael Witz, chief executive officer of StockJungle.com, was that though the company intended to pay the fees indefinitely, it could technically change the no-fee stance within a few years.
While the SEC would not comment on the StockJungle.com case specifically, a spokesperson did say that the SEC reviews mutual-fund names to make sure "the title and the substance of the fund are on the same page."
As a result, the new fund was renamed the "StockJungle.com S&P500 Index Fund." Now, it is being liquidated.
|COMPANY||FUND NAME||INDEX||MONTH FILED|
|AEFC||S&P 500 Index Fund||S&P 500||Feb-00|
|UMB Bank NA||UMB Scouts Equity Fund||S&P 500||Feb-00|
|Franklin Advisers Inc.||Franklin S&P 500 Index Fund||S&P 500||Feb-00|
|Liberty Advisory Services Corp.||Liberty S&P 500 Index Fund||S&P 500||Mar-00|
|GE Asset Management Inc.||GE S&P 500 Index Fund||S&P 500||Feb-00|
|Scudder Kemper Investments Inc.||Kemper S&P 500 Index Fund||S&P 500||Jan-00|
|National City Investment Management Co.||United Association 500 Index Fund||S&P 500||Nov-99|
|X.com Asset Management||X.com Classic Standard & Poor's 500 Fund||S&P 500||Jan-00|
|X.com Protected Standard & Poor's 500 Fund||S&P 500||Jan-00|
|X.com Super Index Fund||Wilshire 4500||Jan-00|
|X.com Small Cap Index Fund||Russell 2000||Jan-00|
|X.com International Index Fund||MSCI-EAFE||Jan-00|
|Teachers Advisors Inc.||TIAA-CREF Equity Index Fund||Russell 3000||Jan-00|
|Bank of New York||BNY Hamilton US Bond Market Index Fund||Lehman Brothers Aggregate Bond Index||Jan-00|
|BNY Hamilton S&P 500 Index Fund||S&P 500||Jan-00|
|Allied Asset Advisors Inc.||Dow Jones Islamic Index Fund||Dow Jones Islamic Market Index||Feb-00|
|American General Asset Management Corp.||North American Stock Index Fund||S&P 500||Mar-00|
|North American Small Cap Index Fund||Russell 2000||Mar-00|
|ProFund Advisors LLC||Nasdaq 100||Mar-00|
|Manufacturers Security Services LLC||International Index Trust||MSCI-EAFE||Mar-00|
|Small Cap Index Trust||Russell 2000||Mar-00|
|Mid Cap Index Trust||S&P Mid Cap 400||Mar-00|
|Total Stock Market Index Trust||Wilshire 5000||Mar-00|
|500 Index Trust||S&P 500||Mar-00|
|AXA Rosenberg Investment Management LLC||Equity Enhanced Index||S&P 500 (enhanced)||Feb-00|
|American Skandia Investment Services Inc.||ASAF Bankers Trust Managed Index Fund||S&P 500 (enhanced)||Jan-00|
|AExpert Advisory Inc.||Enhans RT SPDR Fund||S&P 500 (enhanced)||Dec-99|