STOXX Limited, a global index provider and creator of the leading European equity indices, today announced the launch of the EURO STOXX 50 Monthly Leverage and EURO STOXX 50 Monthly Double Short indices, and the LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices. The new indices replicate leveraged and short investment strategies based on a monthly rebalancing methodology.
The EURO STOXX 50 Monthly Leverage, EURO STOXX 50 Monthly Double Short, LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices are designed to underlie financial products such as exchange-traded funds (ETFs) and structured products.
“The new EURO STOXX 50 Leveraged and Double Short indices and LevDAX and ShortDAX x2 monthly indices enable market participants to track investment strategies based on their bullish and bearish sentiments on European and German equities,” said Hartmut Graf, chief executive officer, STOXX Ltd. “The new indices complement the existing daily leverage and short indices on the EURO STOXX 50 and the DAX by allowing investors to bypass daily market fluctuations and take a more long-term approach. Furthermore, product issuers and their customers also benefit from reduced transaction costs, as portfolios would only have to be balanced once a month instead of on a daily basis.”
The EURO STOXX 50 Monthly Leverage Index is linked to the monthly performance of the EURO STOXX 50 Net Return Index – measured as of the third Friday of the month - in a leveraged way: A positive performance of the EURO STOXX 50 Index results in twice the positive performance of the EURO STOXX 50 Monthly Leverage Index, and vice versa. The EURO STOXX 50 Monthly Double Short Index replicates a short investment strategy that is inversely linked to the monthly performance of the EURO STOXX 50 Gross Return Index, also as of the third Friday of the month. A negative performance of the blue-chip index results in a positive change of twice the performance the EURO STOXX 50 Monthly Double Short Index, and vice versa.
The LevDAX x2 (monthly) also rises and falls twice as much as the performance of the DAX index, thus providing an effective and innovative strategy for magnifying participation in market movements. The ShortDAX x2 (monthly) measures double the negative monthly performance of the DAX index. Its performance is positive when the DAX falls. The index is designed for investors who expect negative performance on the DAX index or who are looking for an efficient hedge against falling prices.
The leverage factor is adjusted on a monthly basis to ensure that LevDAX x2 (monthly) always achieves twice the performance of the underlying index based on the closing level on the third Friday of the previous month. It complements the existing range of daily leveraged indices. However, if an investment is made between the monthly adjustment dates the leverage generally deviates from the factor 2.
The new STOXX and DAX strategy indices are calculated in euro. Daily historical index values are available back to December 31, 1991 for the EURO STOXX 50 Monthly Leverage and Short indices and back to December 30, 1987 for the LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices. The cost of borrowing and the benefit of earning interest are also taken into account in the calculation of the new indices.
The EURO STOXX 50 Monthly Leverage and EURO STOXX 50 Monthly Double Short indices are part of the STOXX Strategy Index family. Further information on the new indices is available at www.stoxx.com.
The LevDAX x2 (monthly) and ShortDAX x2 (monthly) indices are part of the DAXplus family. Further information is available at www.dax-indices.com.
