Nasdaq To Buy Mergent Dividend Indexes

By
October 31, 2012
Share:

Nasdaq bets big with the planned acquisition of the Dividend Achievers indexing franchise.

Nasdaq OMX Group, the parent company behind the first electronic stock market and a well-established index provider, is about to become one of the largest dividend-focused index providers in the market, with an agreement to acquire Mergent Inc.’s index business, including Indxis.

Mergent is the firm behind the Dividend Achievers Indexes, the same roster of dividend-focused benchmarks underlying ETFs such as the $14 billion Vanguard Dividend Appreciation ETF (NYSEArca: VIG), as well as a number of Invesco PowerShares funds including the $285 million PowerShares Dividend Achievers Portfolio (NYSEArca: PFM) and the $722.7 million PowerShares International Dividend Achievers Portfolio (NYSEArca: PID).

Terms weren’t disclosed, but Nasdaq noted in a press release that the transaction will be a nonmaterial event. The deal is likely to be closed sometime during the fourth quarter.

All in all, some 19 strategies with more than $16 billion are currently tied to Mergent ‘s dividend-focused indexes, a Nasdaq representative told IndexUniverse. The deal would boost Nasdaq index-linked ETF assets under management by 30 percent, according to exchange estimates.

Nasdaq’s move will make it one of the largest dividend-themed index providers in the market, at a time when the pursuit of yield is getting a lot of attention. Many fund providers have rushed to design exchange-traded products that cater to growing investor appetite for income-generating strategies at a time of compressed yields in more traditional fixed-income products.

The Federal Reserve’s recent decision to pump more money into the economy and keep interest rates near zero at least through 2015 ensured that demand for alternative sources of income—such as dividend-paying stocks—will likely remain high.

“As the investment landscape continues to evolve, we see the increased need for indexes to provide rules-based and transparent benchmarks for dividend- and income-themed investments,” Nasdaq’s Executive Vice President John Jacobs said in a press release.

Mergent has been following companies with solid dividend track records since the late 1970s.

 

ETF.COM CHANNELS

Trying to figure out alternatives ETFs? Use our alternatives ETFs channel, library and ETF screener!

Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!

ETF DAILY DATA

The broad-market 'SPY' and energy ETF 'XLE' were the biggest winners in terms of inflows on Thursday, Aug. 27.

The top three ETF issuers all saw net inflows into their products as the market surged on Thursday, Aug. 27.

ETF.COM ANALYST BLOGS

By Dave Nadig

With many ETFs currently trading well off fair value, what’s an ETF investor to do? Don’t panic.

By Matt Hougan

Out-of-favor funds can bring attractive returns.

By Matt Hougan

New data from Charles Schwab show that the death of mutual funds is happening faster than we thought.

By Dave Nadig

Grab the popcorn. Precidian just doubled-down on its nontransparent active ETF proposal with the SEC this morning.

ETF INDUSTRY PERSPECTIVE

By John Del Vecchio

An index that goes long financially sound companies and shorts the ones with problematic balance sheets.

By Dan Draper

The nature of retirement is changing. How can investors adapt?

By Invesco PowerShares

A more in-depth look at the smart-beta survey's results.