(February 21 – 12:25 ET) – State Street Global Advisors has filed a preliminary prospectus for its Dow Jones Canada 40 Index Participation Fund.
The new DJ 40 Canada index is designed to be extremely liquid, with low turnover. Annualized turnover from 1992 to 1999 in the index, as reconstructed by Dow Jones, would have been just 5.3%. Over that time it would have returned a cumulative 186%. Essentially it invests is the 40 biggest, most liquid Canadian firms.
As of December 31 the index represents 61% of the total Canadian equity market, with 30.2% in technology, 13.1% in telecoms, 0.5% in utilities, 17% in financials, industrials 7%, healthcare is 0.6%, energy is 10.5%, consumer cyclical counts for 12.3% and basic materials is 8.8%.
State Street will manage an index participation fund to track this index, rivalling the new i60 units to be based on the S&P/TSE 60 index, that is essentially replacing many of the old TSE indexes.
Index mutual funds have become a hot area in Canada. These participation funds, however, are exchange-traded tracking units that typically have better success tracking their benchmarks. For more on the index fund phenomenon check out the mid-February issue of Investment Executive.
-IE Staff