- What is driving interest in this index?
The Association of Southeast Asian Nations (ASEAN) region is widely recognized for its favorable demographics, including its large and fast-growing population, which, combined with rising incomes, has resulted in a rapidly expanding middle class and consumer-driven growth. In addition to the rise of the consumer, growth of the ASEAN nations is supported by strong infrastructure spending, increased market share in manufacturing due to its competitive labor force, and its outsized share of global trade. Several ASEAN nations have also reduced barriers to foreign investment in recent years, attracting the attention of global investors.
However, obtaining exposure to the ASEAN markets is challenging via conventional S&P Dow Jones Indices indexed or active solutions, given that emerging market equity benchmarks are dominated by a few large markets, such as China, Taiwan, and South Korea. For these reasons, market participants have demonstrated an interest in obtaining dedicated exposure to emerging ASEAN countries.
- How does the index work?
The Dow Jones Emerging Markets ASEAN Titans 100 Index seeks to measure the performance of 100 of the largest companies from Indonesia, Malaysia, Philippines, Thailand, and Vietnam. Singapore has been excluded and Vietnam has been included in order to target less advanced ASEAN markets with the potential for faster long-term growth.
Rather than simply including the largest companies by market cap, the index selection is based on a composite ranking of market cap, revenue, and net income. This is designed to give preference to the most well-established companies in the region that have a track record of generating sizable revenues and positive earnings while potentially tilting away from more speculative companies. It also may lend greater stability to the index composition, given the inherent volatility in company market values. In order to limit single-stock and country-level concentrations, the maximum weight of a single company is limited to 8%, while a single country weight cannot exceed 25% at rebalance.
The same methodology framework has been used within our long-established Dow Jones Titans Series, which was first launched in 1999. These same principles have now been incorporated into the ASEAN region.