As an asset class in Canada, the Royalty Income Trusts have become increasingly important. The market value of Royalty Income Trusts listed on the Toronto Stock Exchange as of December, 2000, was approximately $25 billion, up from $9 billion in 1996. This represents an average annual growth rate of 31 percent. Currently there are over 100 Royalty Income Trusts listed on the Toronto Stock Exchange, and seven of these trusts have a market capitalization in excess of $1 billion.
“We are delighted to have this opportunity to bring Standard & Poor’s global indexing expertise to Royalty Income Trusts,” said Glenn Doody, Director, Canadian Index Operations, Standard & Poor’s. “We have noted a growing demand for a product designed specifically for this type of security and believe that our new index will provide investors with a useful and much needed tool for developing and monitoring their portfolios.”
In addition to an overall index for Royalty Income Trusts, Standard & Poor’s will calculate sub-indices for REITs and the energy sector. Standard & Poor’s anticipates that new investment products, such as exchange-traded funds (ETFs), will be launched on one or more of the new indices.
Royalty Income Trusts were removed from the Canadian indices in 1995 for failure to meet TSE 300 Criteria for Inclusion guidelines. Income trusts are not an incorporated entity, and thus were deemed ineligible for continued inclusion in the TSE 300 Composite index.
Standard & Poor’s, a division of The McGraw-Hill Companies (NYSE: MHP), provides independent financial information, analytical services, and credit ratings to the world’s financial markets. Among the company’s many products are the S&P Global 1200, the world’s first global, equity, real-time index; the S&P 500, the premier U.S. portfolio index; and credit ratings on more than 220,000 securities and funds worldwide. With more than 5,000 employees located in 21 countries, Standard & Poor’s is an integral part of the global financial infrastructure.
