Rahul Seksaria

Indexing the Multinationals

Dow Jones & Co. Inc. recently launched the Global Titans Index, a 50-stock capitalization-weighted index comprising the world's largest multinational companies. The index represents a well-diversified global portfolio that has delivered marginally better returns than popular global benchmarks. John Nuveen & Co. and Nike Securities LP are soon to launch index funds seeking to replicate the index's return.

"Global Titans are companies that will dominate the world's economy well into the 21st century," says Michael Petronella, managing director of Dow Jones Indexes in a Wall Street Journal article. "With no national borders to define their territories, they defy traditional asset categories. Investment professionals now have a way to measure and track them."

Both Nuveen & Co. and Nike Securities have not yet filed for SEC approval and are therefore not in a position to divulge any information about or undertake any marketing activities for their proposed fund.

The DJGT Index includes fifty companies from eight different countries (U.S., Holland, U.K, Germany, Japan, France, Italy and Switzerland). The U.S. accounts for 68.7% of its market capitalization, Europe for 28.3%, and Japan for the remainder.

The index is an appropriate benchmark for the global economy although it includes just the blue-chip stocks of developed nations. DJGT investors benefit from the continuous recovery and potential growth of emerging nations because of the constituent companies' substantial exposure to their economies. It has tracked the popular global indexes quite closely providing marginally higher returns.

Source: Dow Jones & Co., Inc.

The index suits investors wanting to invest in leading global companies that provide earnings potential, broad global exposure and limited volatility. The index's high liquidity and low turnover make it cost-efficient for funds tracking its return.

Below is a list of the inaugural stocks included in the index, ranked by market cap (top-down starting with Microsoft). The index composition will be reviewed annually and changes made as deemed necessary.

Source: Dow Jones & Company, Inc.