The Global Index Group of NYSE Euronext is pursuing its commitment to respond to investors’ needs with the launch of two new indices based on its well-established blue chip indices.
The CAC 40 Dividend Index and the AEX Dividend Index measure the cumulative value of ordinary gross dividends declared by the index constituents of the CAC 40 index and the AEX index, respectively. The value of the two dividend indices is expressed in terms of index points.
The dividends distributed by the constituents of the blue chip indices have, on average, increased at a sustainable pace over the last decade, strengthening the idea that dividends reduce the uncertainty of returns yielded by equities.
On the other hand, it has been observed that banks and derivatives dealers that take positions on the index basket have a significant exposure to dividends, requiring active trading to hedge their positions. The CAC 40 Dividend Index and the AEX Dividend Index are then designed to serve as underlyings for futures contracts, providing investors with an additional tool to effectively manage the risk inherent in the dividends distributed by the index constituents.
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