In This List

TalkingPoints: How Diversification and Index Innovation Are Powering Passive in India

FAQ: S&P/TSX 60 Dividend Points Index

FAQ: S&P/ASX Fixed Interest Indices

Bond Laddering with the S&P AMT-Free Municipal Series Indices

Regional Relevancy of S&P 500® and Dow Jones Industrial Average® Futures in Asia

TalkingPoints: How Diversification and Index Innovation Are Powering Passive in India

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Koel Ghosh

Head of South Asia

Passive investing continues to climb in India, with a CAGR of 49% over the last decade. As regulations and markets continue to evolve, how large is the potential of passive in India and what strategies are in the mix that could fuel this upward trajectory?

1. What are the main drivers of passive investing in India?

Koel: The passive investment space is in its nascent stage in India, though it is growing steadily. At over USD 25 billion assets under management and nearly 86 products, this space accounts for a small percentage of the USD 6 trillion global passive market. The potential of passive is slowly being unleashed through education and awareness, along with government support. The Employee Provident Fund’s allocation to ETFs and the disinvestment program routed through the same passive option has created the opportunity for more visibility and understanding for investors. Further, the underperformance of active funds in particular categories reflected in our bi-annual S&P Indices vs. Active (SPIVA®) research, continues to fuel interest in passive strategies in the region.  

2. What kinds of passive strategies are Institutional Investors using in India and where do you see potential for future innovation?

Pratik: Asset managers in India have embraced passive innovations, using strategies designed to access sectors and industries like banking, and themes including Environmental, Social, and Governance (ESG) and consumption are gaining traction. Smart beta (or factor-based investing) as a category has also seen continued innovation, both in single- and multi-factor strategies. The biggest impediment for the success of passive funds has been education and awareness. With higher awareness, we would expect interest in traditional index-based and smart beta products to increase in the future. Vanilla products may have a larger role to play in building the marketplace before more innovative products take off. Due to regulations and liquidity factors, large-cap ETFs are currently the preferred passive instruments for institutional investors. 

3. Can you discuss the importance of diversification and how indices can inform asset allocation decisions?

Koel: Diversification is a well-established investment approach for minimizing risk. Indices provide an ideal avenue for assessing the performance of a market segment and, when underlying an index-based product, for accessing a basket of securities that is aligned with an investment objective thanks to the transparency of S&P DJI’s index methodologies. Indices cover a wide range of market segments and strategies that vary from regional equity benchmarks like the S&P 500® for the U.S. and the S&P BSE SENSEX for India, sectors like Healthcare and Information Technology, factors like low volatility and quality, different asset classes, or strategies combining factors, or those tracking themes such as dividends. 


FAQ: S&P/TSX 60 Dividend Points Index

  1. What are “dividend points”?  Index points refer to the level of an index.  For example, if the S&P/TSX 60 is trading at 900, it is said to have a level of 900 points.  Dividend points specifically refer to the level of index points that are directly attributable to the dividends of index constituents.
  2. What’s the difference between dividend points indices and other types of indices, like price return and total return indices?  Price return indices represent changes in the market capitalization of index constituents.  They do not account for dividends.  Total return indices reinvest dividends back into the index on the ex-date of each dividend paying constituent.  Total return indices therefore represent changes in market capitalization plus reinvested dividends.  Finally, dividend points indices track dividend payments in isolation, reflecting the periodic cumulative dividends of all index shares.  They do not include any changes in market capitalization.
  3. One can think of the different types of indices as representing different investment strategies.  Some market participants elect to reinvest dividends in the stocks they hold, and this strategy could be benchmarked with the S&P/TSX 60 TR.  On the other hand, some market participants hold stocks but do not reinvest dividends—electing instead to take dividends in cash as a source of income.  This strategy could be benchmarked with a combination of the S&P/TSX 60 Price Return and the S&P/TSX 60 Dividend Points Index.

  4. Why is there a dividend points index?  By offering an index that represents dividend payments of S&P/TSX 60 members, S&P Dow Jones Indices (S&P DJI) allows market participants to track an important component of equity returns—independently of equity price changes.  The index can also be used as a basis for financial products.
  5. Can I invest in dividend points?  No, not directly.  Like other indices, it is not possible to invest directly in dividend points indices.
  6. How many S&P/TSX 60 Dividend Points indices are there?  There is one index that resets quarterly and one that resets annually.  They are called the S&P/TSX 60 Dividend Points Index (Quarterly) and the S&P/TSX 60 Dividend Points Index (Annual).
  7. Why does the index periodically reset at zero?  The index represents cumulative cash dividends paid over a defined period, either one quarter or one year.  At the start of the next period, the index is reset to zero so that it reflects dividends paid in discrete periods that coincide with the expiration of S&P/TSX 60 futures.  Having the index reset when futures expire is useful because it enables the index to potentially be used as the underlying index for financial instruments that could be designed to hedge periodic dividend risk of index futures. 
  8. Resetting also allows for comparisons of dividend payouts from one period to another.  One can measure changes in dividends from one period to another.

  9. When does the index reset at zero?  The S&P/TSX 60 Dividend Points Index (Quarterly) resets after the market close on the third Friday of the last month of each calendar quarter.  This coincides with S&P/TSX 60 futures expiration.  The S&P/TSX 60 Dividend Points Index (Annual) resets only on the third Friday of December.
  10. How have S&P/TSX 60 dividends grown over the years?  Measured year-over-year, the annualized growth rate of dividends was about 5.3% for the five-year period from July 2015 to July 2020.
  11. How much of the total return of the S&P/TSX 60 has been due to dividends?  Over the same five-year period from July 2015 to July 2020, the S&P/TSX 60 TR grew about 5.8% per year.  Approximately 56% of this growth came from the reinvestment of dividends.
  12. What dividend payments are included in the S&P/TSX 60 Dividend Points Index?  The index represents dividends paid by S&P/TSX 60 constituents that are also included in the S&P/TSX 60 TR.  The determination of which dividends are included in the total return index is described in the S&P/TSX Canadian Indices Methodology.
  13. Are special dividends included in the index?  Only stock and cash dividends, as defined in the S&P/TSX Canadian Indices Methodology, are included.
  14. Do dividends get counted on the ex-date or pay date?  Dividends are added on the ex-date.  This is consistent with the S&P/TSX 60 TR.  Since stock prices are adjusted downward to account for dividends on the ex-date, this method is more straightforward than adding dividends on the pay date.
  15. How is the index calculated?  On each trading day, S&P DJI sums the dividends of all index shares going ex-date and divides that figure by the S&P/TSX 60 divisor, which transforms the CAD value into index points.  Dividend payments in USD are translated into CAD at the same exchange rate used for the total return index.  Except for the reset day, these index points are added to the cumulative total for the respective period to derive the value of the S&P/TSX 60 Dividend Points Index for that day.

For more information on the S&P/TSX 60 Dividend Points Index, please visit our website:


FAQ: S&P/ASX Fixed Interest Indices

  1. Why were the S&P/ASX Fixed Interest Indices launched?  The S&P/ASX Fixed Interest Indices were first introduced in 2011 to complement the existing S&P/ASX Equity Indices, which offer heightened transparency for equities.  S&P Dow Jones Indices (S&P DJI) and the Australian Securities Exchange (ASX) have a long history in servicing debt and equity markets on a domestic and international level.  S&P DJI, together with ASX, is a leading provider of benchmark indices for the Australian market.
  2. Which indices are currently included in the S&P/ASX Fixed Interest Index Series?  The S&P/ASX Australian Fixed Interest Index Series includes over 250 indices, covering various sectors, maturities, and ratings of the Australian fixed interest market.  These indices are designed to track investable, Australian-dollar-denominated, locally issued bonds as well as the Australian bill market.

  1. What portion of the market do these indices track?  The S&P/ASX Australian Fixed Interest Index is the flagship Australian bond index and seeks to measure the performance of Australian fixed rate bonds that meet specific investability criteria.  Offered across defined maturity buckets and sector-level indices, the index is designed to be a broad benchmark index, serving the performance attribution and benchmarking needs of the investment community.

    Maturity bucket indices for the S&P/ASX Australian Fixed Interest Index include the following.

    Credit rating band indices for the S&P/ASX Australian Fixed Interest Index include the following.

    Sector-level indices include the following.

    The S&P/ASX Bank Bill Index offers short-term exposure to Australian-dollar-denominated bank bills with maturity profiles of up to three months.  This index is designed for use by institutional investment managers, mutual fund managers, and professional advisors.


Bond Laddering with the S&P AMT-Free Municipal Series Indices

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Jason Giordano

Associate Director, Strategy Indices


  • A bond ladder theoretically offers a means to manage cash flows and provide investors with a stream of income.
  • Bond laddering with indices can capture the benefits of a traditional bond ladder strategy with additional advantages of diversification and transparency.

Bond laddering is a mechanism widely used by the investment community to mitigate the potential risks related to buying individual bonds. In this paper, we explain the potential risks, return, and diversification of using a ladder strategy in the municipal bond market.

Bond laddering is a strategy that calls for maturity weighting, which involves dividing bond investments among several different bonds with increasingly longer maturities. For example, instead of buying one bond with a six-year maturity, market participants can allocate to six different bonds, where each bond matures at a different year throughout the six-year horizon.

Bond ladders may be constructed to address both interest rate and reinvestment risk. If interest rates rise, the strategy calls for reinvestment of the funds from bonds that are maturing at the bottom of the ladder into bonds earning higher yields, and these are in turn added to the top of the ladder. If rates fall, this strategy seeks to mitigate reinvestment risk, because longer-dated bonds at the top of the ladder, which presumably were purchased when interest rates were higher, should be yielding higher returns.


Regional Relevancy of S&P 500® and Dow Jones Industrial Average® Futures in Asia

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Tianyin Cheng

Senior Director, Strategy Indices

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Izzy Wang

Analyst, Strategy Indices

Global markets are increasingly integrated, driven by the diversified global supply chain, deregulation of capital markets, and technological advances.  The interconnection of global markets has been the key driver for co-movement of market returns, especially during periods of crisis.  This has important consequences in terms of portfolio hedging and risk management.

Meanwhile, with the continued growth in exchange-traded derivatives supported by the need for increased price transparency and liquidity, investors have sought to efficiently integrate listed derivatives into their portfolios.

This paper presents the regional relevancy of S&P 500 and Dow Jones Industrial Average (DJIA) futures for hedging and risk management use by Asian investors. While the ecosystem around the S&P 500 and DJIA covers multiple areas, including trading of options, ETFs, mutual funds, etc., we are only capturing part of the complexity of Asian trading by limiting the study scope to futures. We evaluate the usefulness of those instruments through the following metrics.

  • Liquidity: As shown by aggregate U.S. dollar total value traded for the futures contracts on the two U.S. benchmarks during Asian trading hours.
  • Co-movements of markets: As measured by correlations between the two U.S. benchmarks and seven major Asian market benchmarks, based on daily returns of the futures prices at Asian end of day.
  • Flexibility: As indicated by contract size and trading hours of the futures on the two U.S. benchmarks versus other major Asian market benchmarks.

The results suggested certain benefits of trading U.S. benchmarks in Asia, providing a new perspective on the use of index derivatives to meet the needs of Asian investors.


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