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| At its 17 February 2011 meeting, the Tel Aviv Stock Exchange (TASE) Board of Directors approved revisions to Tel Div-20 index methodology. Under the current rules, the index includes the 20 companies with the highest dividend yields. The primary objective of the revisions, which entail an expansion of the index’s constituent base, is to improve the representativeness of the index, which will now include major actively traded companies with a consistent, but comparatively modest, dividend policy. By broadening the index, TASE also seeks to stabilize constituency changes and mitigate price fluctuations that occurred following index review and update dates.
Since its launch in July 2006, the Div-20 index has steadily gained popularity and currently serves as the underlying asset for 6 ETNs with a combined market cap approaching NIS 1 billion (appx. US $275 million).
The key changes can be summarized as follows:
1. The number of constituent companies will not be limited and the index will include all shares meeting threshold criteria.
2. The index will include shares, which distributed dividends of at least 2% in 2 of the previous 3 years. (This will enable companies with a stable long-term dividend policy to be included in the index even if in a year of economic crisis dividends were not distributed).
3. Free float:
• Shares already included in the index on the reference date – at least NIS 300 million.
• Shares entering the index on the reference date – at least NIS 400 million.
4. The index will be updated once a year on March 15.
5. The name of the index will be changed from Tel Div-20 to Tel-Div.
The key differences between the current and impending indices are summarized below
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New “Tel-Div” |
"Tel Div-20” |
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No limit, currently - 39 |
20 |
No. of shares
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Equal weight based on number of shares, currently- appx. 2.5% |
5% |
Weighting
(equal weight)
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NIS 270 billion ≈ US $75 billion
Excluding 5 largest shares – NIS 130 billion, ≈ US $36 billion |
NIS 163 billion ≈US $45 billion
Excluding 5 largest shares, NIS 28 billion, ≈ US $8 billion |
Market Cap
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NIS 110 billion, ≈ US $30 billion
Excluding 5 largest shares – NIS 45 billion, ≈ US $12.5 billion |
NIS 70 billion, ≈ US $19 billion
Excluding 5 largest shares – NIS 9 billion , ≈ US $ 2,5 billion |
Free Float
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Real Estate (26%), Communications (13%), Investments (13%), Commerce (10%), Other (38%) |
Real Estate (25%), Communications (25%), Investments (15%), Commerce (10%), Other (25%) |
Dominant Sectors
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| The revisions will come into effect starting 3.4.2011 and the reference date is scheduled for
Tuesday, March 15, 2011
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