October 22, 2014
Thomson Reuters Launches First-of-its-kind StarMine Quality Earners APAC ex-Japan Income Index
Hong Kong/New York - Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today announced the launch of a new index that identifies the most sustainable earning and high dividend-yielding companies in Asia Pacific excluding Japan. The Thomson Reuters StarMine Quality Earners APAC ex-Japan Income Index offers not only greater total returns and higher income generation compared with a traditional Asia Pacific index, but also lower volatility to help investors of exchange traded funds (ETFs) manage portfolio risk. StarMine's proprietary earnings quality model identifies those companies with the most reliable and persistent earnings over time, giving the index an edge over other similar indices.
This first-to-market index highlights Thomson Reuters ability to generate 'smart-beta' indices using the breadth of the data it manages. Such next generation indices are designed to add and remove stocks based on a rules-driven investment strategy, and Thomson Reuters is uniquely positioned to administer and calculate a variety of smart-beta indices.
The Thomson Reuters StarMine Quality Earners APAC ex-Japan Income Index can be licensed to issuers of ETFs and other investment products. It offers the benefit of industry leading quantitative stock selection models within an independent and transparent index, to give investors exposure to current and forecasted steady, profitable income-generating stocks. Unlike most earnings forecasts which respond solely on accruals, the StarMine Earnings Quality model also identifies companies with strong cash flows, high operating efficiency and strong track record of reported earnings meeting earlier projections.
"Investors in Hong Kong and the rest of Asia Pacific are telling us they are looking for income stocks," said Stephan Flagel, head of Indices, Thomson Reuters. "At Thomson Reuters, we have access to an unrivalled set of cross-asset prices, analytical and evaluated data to use for proprietary and custom indices. Using our StarMine Earnings Quality model, not only can we identify the top earners at each point in time, but we can also tell which of these companies are the most reliable and likely to persist in being profitable."
The index uses a factor based on a company's dividend yield and StarMine Earnings Quality Score to determine top earners. The final 50 candidates are given an equal weighting in the index, and currently have an average market cap of $7.7 billion. This results in approximately 30% higher returns and 30% lower volatility than a typical market capitalization weighted index for the same region, over the last ten years.
Thomson Reuters intends to continue to develop its "smart-beta" index offerings, by building proprietary indices as well as bespoke indices for clients that leverage unique proprietary data, such as StarMine Models, I/B/E/S estimates, or environmental, social and governance (ESG) ratings from its ASSETt4 database to name a few.
Thomson Reuters StarMine's team of financial researchers and analysts have developed a reputation for creating unique and profitable stock selection and credit default prediction quantitative models that generate alpha through observable market anomalies and intuitive economic hypotheses. StarMine has a long and proven track record in successful predictive quantitative modelling – both short and long term. Click here for more information.
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