The Philippine Stock Exchange Inc. (PSE) is set to introduce new indices this year to cater to the index service requirements of a broader investor base. Among the new indices is the PSEi Total Return Index (PSEi TRI).
A TRI gauges the overall return on the index, factoring both capital gains and dividend payments, if these dividends are reinvested back into the index.
“We have always been focused on investment gains from price appreciation. As done in other markets, we want to show the bigger picture on the profitability of stock and index investing,” said PSE President and CEO Ramon S. Monzon.
To calculate the PSEi TRI, the Exchange used 1,000 as base value with December 28, 2007 as base year. The PSEi TRI closed at 2,771.01 on December 28, 2018. This represents a 10-year cumulative gain of 417.6 percent compared with a 298.6 percent rise in the PSEi from 2008 to 2018. A five-year computation of the PSEi TRI shows a growth of 38.7 percent compared with a 26.8 percent increase in the PSEi.
The PSEi TRI has the same constituents as the PSEi and integrates regular and special cash dividends of index components on ex-date. If there are changes in the composition of the PSEi, the same will be reflected in the PSEi TRI.
The PSEi TRI will be available on the Exchange’s website no later than 5:00 p.m. of each trading session.
Aside from the PSEi TRI, the Exchange is also reviewing the current sector index classification.
“We want our sectoral indices to be more representative of the industries they belong to. This will be beneficial to fund managers in planning and executing their investment strategies. We hope to announce the new sector classifications by mid-year,” Monzon added.
All PSE indices are available for index licensing. The Exchange will begin charging license fees to Collective Investment Schemes that track PSE indices or use the PSE indices as the underlying index for their fund. The charging will be fund specific and the license fee will depend on the size of the fund’s Net Asset Value.
“Index licensing is not something unique to the PSE. Several other exchanges globally charge for the intellectual property of the indices they develop and maintain,” explained Monzon.