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Wealth Allocation Strategy Indices offer investors diversification, low tracking error, which means reduced risk, and higher return. GWA develops wealth weights for all companies in FTSE’s indices, not by market capitalisation, but by net income, cash flow, and book value. These measures of company wealth creation are taken from the Profit and Loss Statement and Balance Sheet. The result is an active investment strategy that is ‘wrapped’ in an index. It offers institutional investors an alternative to market cap index funds for core portfolios. The seven new non-price strategy indices are:
- FTSE GWA UK
- FTSE GWA Europe
- FTSE GWA All-World Developed
- FTSE GWA All-World Developed ex UK
- FTSE GWA All-World Developed ex USA
- FTSE GWA All-World Developed ex Japan
- FTSE GWA All-World Developed ex Australia
David Morris, Chief Executive of GWA said, “In the long run, growth of a company’s share price must follow the growth of the company’s underlying wealth. A FTSE GWA wealth allocation strategy index avoids short-term price volatility. It provides a long term, non-speculative, investment approach with a built-in bias to buy low and sell high.”
Mark Makepeace, Chief Executive of FTSE Group said, “Wealth allocation investing provides a new innovative approach to indexing, which will appeal to many investors looking for an alternative to cap-weighted indices. Investors will welcome the availability of these new products.”
Investment consultants are supporting the introduction of these new non-price indices and Legal and General Investment Management as well as State Street Global Advisors are expected to provide indexed funds based on the new FTSE GWA indices.
