INDEX SERIES FTSE PUBLICATIONS FTSE ETF Issuer Services.
BEIJING BOSTON DUBAI HONG KONG LONDON MILAN MUMBAI NEW YORK PARIS SAN FRANCISCO SHANGHAI SYDNEY TOKYO FTSE FTSE Group ( FTSE ) is a world-leader in the creation and management of indices. FTSE calculates and manages a comprehensive range of equity, fixed income, real estate, currency, commodity and non market-cap indices, on both a standard and custom basis. The company has collaborative arrangements with a number of stock exchanges, trade bodies and asset class specialists around the world. FTSE indices are used extensively by investors world-wide for investment analysis, performance measurement, asset allocation, portfolio hedging and for creating a wide range of index tracking funds, derivatives and ETFs. FTSE is owned by London Stock Exchange Group. www.ftse.com
Overview. FTSE commits people, technology and ideas to provide tools which help ETF issuers grow their business. A convergence of longstanding index calculation experience, award-winning innovative index concepts, robust technologies and transparent calculation methodologies provides the foundation for successful ETFs. FTSE calculates indices which underpin many of the world s largest and most widely traded ETFs and enhances the breadth and depth of information available to issuers with a suite of analytical tools. Our service driven building block approach to index development ensures we remain the preferred index provider for over 40 ETF issuers who seek to enable investor access to new asset classes, geographies and investment approaches. 1
FTSE ETF Issuer Services. Good ETFs track a good index. Great ETFs track a FTSE index. Over 40 ETF issuers worldwide rely on FTSE to provide robust, reliable and representative index solutions which underpin many of the world s most liquid and widely traded ETFs. The values and principles which define FTSE ensure we can meet the changing needs of today s ETF providers: Authoritative We have been creating indices since 1984. By being at the heart of the markets we serve, we understand the needs of our clients and deliver the right products. Transparent FTSE indices are managed in accordance with publicly available sets of rules. These rules allow market participants to predict how FTSE will deal with changes to indices, helping to minimize the cost associated with managing funds and products based on FTSE indices. Representative Our indices are constructed using a building block approach, allowing clients to choose from a broad range of criteria to get a benchmark which is truly representative and meaningful. Responsive We listen to the needs of our clients and respond. To provide the market with cutting edge solutions, we actively engage the market with frequent consultations and user groups. Collaborative & Supportive FTSE provides an end-to-end service for ETF issuers, combining a collaborative approach to product development with knowledgeable, responsive 24 hour support. Strong Governance Independent committees govern our indices to ensure that they meet market needs and that index ground rules are correctly applied and adhered to. 2
Solutions for all asset classes. FTSE calculates innovative tradable indices across all asset classes. We construct indices using a building block approach, enabling product issuers to select from a broad range of calculation options, screening criteria and weighting approaches to obtain a tradable index that meets their specific requirements. 3
FTSE ETF Issuer Services. Classification. Industry classification is determined according to the Industry Classification Benchmark (ICB), a globally recognised standard operated and managed by FTSE for categorising companies and securities. Over 75,000 securities are classified by ICB, providing an unrivalled data source for global sector analysis and a standardized basis for constituent selection and product design. 75,000 Number of securities classified by ICB icbenchmark.com 4
Transparency Independence Tradability Reliability 5
FTSE ETF Issuer Services. A comprehensive suite of issuer services. FTSE s ETP service unit seeks to support issuers from idea origination, research and validation, to ETF launch and beyond. Our dedicated team leverages the full breadth of FTSE s research, distribution, marketing and communications expertise to provide a seamless experience backed up by responsive 24 hour global support. Idea generation Our specialist research teams provide hands-on technical support to issuers seeking to develop new ETF concepts. Research & analytics Our in-house research and analytics teams provide a range of online tools to enable deeper analytical insight into both the indices offered by FTSE, as well as custom baskets, easy monitoring of index changes and access to a timely range of information across asset classes. 6
iopv/ inav / RUPV Our independent calculation service provides a robust, cost efficient portfolio valuation in line with FTSE s world class calculation and information dissemination standards. Distribution FTSE works closely with major data vendors, distributors and global media to ensure indices underlying ETFs are highly visible to the global investment community. Marketing and communications FTSE benefits from high brand recognition with both institutional and retail investors worldwide. We work closely with issuers to support their marketing, investor relations and communications activities around new product launches and on an ongoing basis. 7
FTSE ETF Issuer Services. An ecosystem for thriving ETFs. As part of London Stock Exchange Group, FTSE sits within the heart of one of the world s most mature ETF marketplaces. Underpinned by globally recognised standards of regulation and a deep pool of liquidity, ETF issuers can benefit from a broad range of integrated services provided by companies across London Stock Exchange Group. 8
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FTSE ETF Issuer Services. In Focus Accessing New Markets. USA 10
Objective FTSE was challenged to provide liquid, tradable indices which would enable investors worldwide to access China, one of the worlds largest and most important emerging markets, whilst applying globally recognised standards of index design and meeting different regulatory environments worldwide. Result We responded by creating the FTSE China Index Series- a comprehensive index series covering all Chinese share types and including the FTSE China 25 Index which consists of the largest 25 Chinese stocks (H Shares and Red Chips) listed on the Stock Exchange of Hong Kong. The index is specifically designed for international investors, combining the ease of trading on SEHK with a methodology to meet regulatory requirements worldwide. The index is published on an intra-second streaming basis to provide greater transparency and insight into market activity. The FTSE China Index Series has been adopted by major international issuers and ETFs linked to the series are available to investors on exchanges worldwide. The index series also underlies the world s largest China ETF by assets ishares FTSE China 25 Index Fund. UK Germany France Switzerland Italy China Hong Kong Malaysia Singapore Australia 11
FTSE ETF Issuer Services. In Focus Improving Investor Access: Real Estate. Objective Provide a series of practical, flexible and investible indices to help investors identify and access the investible real estate market across various geographic regions and property types, increasing investment, risk management and diversification opportunities. Result FTSE collaborated with leading REIT trade associations in Europe and North America to develop the FTSE EPRA/NAREIT Global Real Estate Index Series. The series tracks the value of real estate in both developed and emerging countries across the full range of real-estate sectors. Specialty tradable indices have also been introduced including Dividend +, Investment Focus and Non REITS Indices. Well established as the premier global benchmark for measuring REIT performance, the FTSE EPRA/NAREIT Global Real Estate Index Series has been widely adopted by issuers worldwide, with ETFs linked to the indices trading on over 8 exchanges globally. 12
In Focus Evolving Index Concepts. Objective FTSE was approached to provide technical support and input into the creation of a rules-based index which would reduce the volatility of the FTSE 100, meeting investor demand for more risk efficient exposure to UK equities. Result Our research and quantitative development teams worked to structure the FTSE 100 Minimum Variance Index, a rules-based index which utilises historical return information to determine constituent weightings, offering a potential improvement to the risk reward trade-off. In 2012, Ossiam listed a physically replicated ETF tracking the index on London Stock Exchange. Both ETF and underlying index were the first of their type. 13
FTSE ETF Issuer Services. Award Winning. FTSE is proud to be the recipient of a number of industry awards recognizing our commitment to excellence & innovation in indexation: 2010 2011 2012 2013 2014 Best Provider of Tradable Indices (Asia Pacific) Asian Investor Service Providers Awards Index Provider of the Year European Pensions Awards Index Provider of the Year European Pensions Awards Index Provider of the Year European Pensions Awards Most Innovative ETF Index Provider Global ETF Awards ETF Index Provider of the Year (Asia) Asia Asset Management Best of the Best Awards Innovation of the Year Structured Products Europe Awards Best Tradable Index Provider Asian Investor Awards Most Recognised ETF Brand (Asia) Global ETF Awards Most Recognised ETF Brand (FTSE China A50) Global ETF Awards Global Index Provider of the Year Global Pensions Awards Index Provider of the Year in China Asia Asset Management Awards ETF Index Provider of the Year Asia Asset Management, Best of the Best Awards Index Innovation of the Year Asia Structured Products Asia Awards Best Local Index Provider of the Year Asia Asian Investor Awards 14
Data products. FTSE provides detailed constituent and index level data packages. The data products offer an array of service options which meet a broad array of client requirements. Structured on a file-by-file basis, investors can access the packages via FTP, directly from FTSE or from one of FTSE s third party distributors. Files are available on a daily, monthly or one-off basis. Index Valuation Service This service provides index level data in a range of currencies. Constituent Service This service provides index constituent data including market capitalization and constituent weightings on a daily basis. Tracker Service This service highlights corporate actions, dividend payments and other constituent changes on a daily basis. Real-Time Data Over 1,000 real-time indices are available directly form FTSE, and via major data vendors, to support the creation of tradable products. FTSE Daily Event Monitors Easily viewable, timely online reference source for users who require information about index changes and corporate actions. 15
FTSE ETF Issuer Services. Analytic services. Built by our specialist in-house research and analytics teams, FTSE provides a range of powerful online tools designed to provide deeper analytical insight into the indices provided by FTSE, increasing the depth of information and transparency available to issuers. FTSE Analysis+ A powerful screening, research and idea generation tool which enables users to create and save customised baskets of stocks based on user defined criteria and view historical performance, market related data and basket fundamentals. FTSE Index Viewer A useful tool to enable product issuers to view and compare the performance and valuation ratios of over 50,000 indices. For more information on any of FTSE s products, please visit ftse.com or email info@ftse.com 16
This presentation does not constitute an offer or invitation to buy or sell any investment or participate in any investment activity, nor any advice concerning the acquisition or disposal of securities. This presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 ( FSMA ) for the purposes of section 21 of FSMA. Accordingly this presentation and the information contained within it is only made to, and for the use of, persons whom FTSE believes to be investment professionals within the meaning of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or U.S. institutional investors and major U.S. institutional investors, as provided by Rule 15a-6 under the U.S. Securities Exchange Act of 1934. These slides should not be relied upon by anyone else. If you have not received this presentation directly from FTSE, do not use or rely on it or forward it to anyone else. All information is provided for information purposes only and is derived from historical data and information deemed to be reliable and generally available to the public in its primary form. Nothing in this presentation constitutes financial or investment advice, nor any advice concerning the acquisition or disposal of securities. You should exercise your discretion in your use of FTSE Indices (the Index ) and if you do not have the relevant professional expertise in relation to investments of the kind the Index relates to, before using the Index you should consult an investment professional who does for advice. FTSE makes no claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Index or the fitness or suitability of the Index for any particular purpose to which it might be put. No responsibility or liability can be accepted by FTSE for any errors or for any loss from the use of this presentation. All figures and graphical representations in these slides refer to past performance and are sourced by FTSE. Past performance is not a reliable indicator of future results. This publication is not intended for dissemination to the public or distribution by subscription and recipients of this publication shall not disseminate or distribute it in any way. No part of this publication may be reproduced, stored in a retrieval system or transmitted by any other form or means whether electronic, mechanical, photocopying, recording or otherwise without the prior permission of FTSE.