Products July 1, 2008

Dow Jones Launches Index for Persian Gulf Stocks

Investors have a new way to track the performance of stocks in the Gulf Cooperation Council (GCC) member states.
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Dow Jones Indexes launched the Dow Jones GCC and the Dow Jones Islamic Market GCC indexes. According to a press release, the new indexes measure the performance of conventional and Shari’ah compliant stocks of five of the GCC member states Bahrain, Kuwait, Oman, Qatar, and United Arab Emirates.

The five countries included in the index represent the investible universe of the GCC region and will be the first in a series of conventional and Shari’ah compliant GCC indexes. The Dow Jones GCC and Dow Jones Islamic Market GCC indexes represent approximately 95% of the float-adjusted market capitalization of the five countries.

The Dow Jones GCC and Dow Jones Islamic Market GCC Indexes are weighted by float-adjusted market capitalization. The weights of individual stocks are capped at 15% in each country in both indexes—and at 30% for Bahrain in the Dow Jones Islamic Market GCC Index, in order to prevent the index from being dominated by certain securities, according to the release. Back-tested estimated daily index history is available for both indexes back to December 31, 2003.

Component Parts

As of June 15, 2008, the top 10 components for the Dow Jones GCC Index by free-float market capitalization are: Mobile Telecommunications Co, Kuwait; Kuwait Finance House, Kuwait; National Bank of Kuwait, Kuwait; National Industries Group, Kuwait; Emaar Properties, United Arab Emirates; Dubai Financial Market, United Arab Emirates; Industries of Qatar, Qatar; Qatar National Bank, Qatar; DP World, United Arab Emirates and Public Warehousing Co, Kuwait.

The top 10 components for the Dow Jones Islamic Market GCC Index by float-adjusted market capitalization are Public Warehousing, Kuwait; Mobile Telecommunications, Kuwait; Investment Dar, Kuwait; Gulf Cable & Electrical Industries, Kuwait; Boubyan Petrochemicals, Kuwait; Emaar Properties, United Arab Emirates; National Real Estate, Kuwait; Du, United Arab Emirates; Qurain Petrochemical Industries, Kuwait; Qatar Islamic Bank, Qatar and Arabtec Holding, United Arab Emirates.

Returns

As of June 15, 2008, the Dow Jones GCC Index and the Dow Jones Islamic Market GCC Index had an annualized price return of 27.55% and 26.49% respectively from its base date December 31, 2003, in a backtest, according to the release.

The Dow Jones GCC and Dow Jones Islamic Market GCC indexes are calculated in U.S. dollar and reviewed quarterly in March, June, September, and December.

More information is available at www.djindexes.com.

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In Practice July 1, 2008

What Firms Need to Capture the Mass Affluent

Celent researchers propose strategies for advisory firms to win the fight for the mass affluent.
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The mass affluent are a segment to be sought by advisers, and these individuals require an altered strategy from the high-net-worth.

According to a recent Celent/Oliver Wyman report, Capturing the Opportunity in the US Mass Affluent Segment, the U.S. mass affluent (defined as a net worth of $250,000 to $2 million) are the most poorly served market, although they command an important field of wealth in this country. The mass affluent segment represent 31% of the total households and 92% of wealthy households, as well as 47% of the total assets in the U.S., according to a release from Celent.

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“Amazingly, the opportunity to capture the mass affluent is just as open as it was 20 years ago, when firms started identifying this segment as a target. No firm today has effectively captured the mass affluent,” said Robert J. Ellis, senior vice president of Celent’s Wealth Management Group and co-author of the report.

Recent research from TowerGroup also came to this conclusion: The attention of affluent American has yet to be claimed. TowerGroup honed in on the specific opportunity for advisers in the retirement income space (see Affluent Most In-Demand for Retirement Income Services).


Analysts at Celent suggest firms maintain the following in order to dominate the market of the mass affluent:

  • A strong value proposition that reflects the goals and aspirations of the mass affluent while generating sufficient revenue to serve them profitably.
    A strong brand that resonates with the mass affluent, affirming their status without overreaching by pretending they are interchangeable with high-net-worth and ultra-high-net-worth households.
  • A strong marketing message that speaks to their hopes and fears in a manner that is not condescending, not aimed at a lifestyle or affluence they have not yet achieved, and not lumping them in with the mass market, from whose orbit they have achieved escape.
  • A strong and complete menu of products and services developed solely to meet the needs of these households.
  • Effective delivery channels that serve the mass affluent by respecting their time and providing them with access and information when it is convenient for them, not the financial institution.
  • Development of appropriate technologies to provide a high level of service while recognizing the significantly larger population of the mass affluent segment. An appropriate cost servicing model will leverage technology and delivery channels.

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