Financial Times Stock Exchange International entered the post-euro European benchmark melee on June 14 with the launch of its FTSE EStars index.
With 29 stocks, including the likes of Daimler Chrysler, Deutsche Bank, Unilever and Elf Aquitaine, the index is composed of the largest and most liquid shares from the Eurozone countries. The 'Magic 29,' as the components of the index are also dubbed, are included in all the major cross-border eurozone indexes on which derivatives products are based, such as those maintained by MSCI, Dow Jones and FTSE.
Currently, the index tracks 8 German, 8 French, 7 Dutch, 3 Spanish and 3 Italian companies, representing nearly 40% of the total market capitalization of the FT/S&P Eurobloc benchmark index.
The EStars index was designed for the institutions that create retail index-based products and the people that use those products, according to a FTSE spokesperson. 'It's aimed at people looking for some exposure to Europe, who want to dip their toe in the water without going in too deeply... An investor investing in Europe for the first time would feel comfortable with it.'
In designing the index, FTSE consulted with investment professionals regarding its construction.
Ninety percent of nearly 50 financial institutions throughout Europe surveyed by FTSE believed liquidity was the most important feature of an equity trading index, and a significant number stated that an ideal index would have less than 50 companies.
Futures and options on the EStars index began trading on the London International Futures and Options Exchange and on the Amsterdam Exchanges as of June 29.
