NEW YORK, June 11, 2024: S&P Dow Jones Indices (S&P DJI), the world's leading index provider, today announced the launch of the S&P 500 Economic Moat Index, a factor-based benchmark that systematically identifies and measures companies that have long-term, sustainable competitive advantages versus their competitors.
As a pioneer of factor-based indexing, the new S&P 500 Economic Moat Index further expands S&P DJI's rules-based factor index capabilities, which currently tracks the performance of various factors including: dividends, value, low volatility, momentum, quality, and size/equal weight.
The S&P 500 Economic Moat Index is designed to track high quality companies that are surrounded by so-called "economic moats", i.e. those that are considered to have lasting competitive advantages that enable them to preserve market share and generate higher profits over the long-term according to the S&P 500 Economic Moat Index Methodology.
"Purposefully designed to present differentiated factor solutions, this index supports greater choice to market participants that are interested in leveraging quality," said Rupert Watts, Head of Factors and Dividend Indices at S&P Dow Jones Indices. "By driving innovation and embracing new datasets, S&P DJI is excited to add the S&P 500 Economic Moat Index to its already established factor-based index offering."
The S&P 500 Economic Moat Index selects companies based on an S&P DJI proprietary Economic Moat Score, which is the average of three underlying scores: sustained high return on investor capital (ROIC), sustained high gross margin and high market share (the "Market Share Score"). Utilizing the flagship S&P 500 as the underlying selection universe, the S&P 500 Economic Moat Index is the first full systematic moat strategy to select the 50 highest ranking companies according to the foregoing metrics to form the index.
The S&P 500 Economic Moat Index sources the Market Share Score from Syntax, a financial data and technology company based in New York. The Syntax Market Share Scores are based on Syntax's proprietary Functional Information System (FIS)® data, which evaluates companies by the characteristics (typically revenues) of their various product lines. For more information about the Syntax Market Share Scoring Methodology, please visit: www.syntaxdata.com/.
Factor index strategies are designed to provide a tool for those pursuing specific goals such as risk reduction over the long-term through diversification or by isolating distinct market characteristics. Factors may offer performance that differs from that of the broad market due to their distinct risk profiles. For more information about the new S&P 500 Economic Moat Index or S&P DJI's factor-based index offering, please visit: https://www.spglobal.com/spdji/en/index-family/dividends-factors/.
