Dow Jones adds four indexes to track growth, value and dividend stocks

By Susanna Moon

Chicago, April 20 - Dow Jones Indexes said it added four indexes to its series of quantitative strategy indexes called Dow Jones RBP indexes offered with Transparent Value LLC.

Three of the additions are U.S. large-cap indexes tracking growth and value stocks. They are the Dow Jones RBP U.S. Large-Cap Growth index, the Dow Jones RBP U.S. Large-Cap Value index and the Dow Jones RBP U.S. Large-Cap Core index.

The Dow Jones RBP U.S. Dividend index uses dividends to select and weight companies.

Large and actively traded securities are selected for the indexes in part based on their "RBP," or required business performance, probabilities. These proprietary probabilities are calculated by taking a reverse discounted cash flow approach to indicate the likelihood that a public company will deliver the business performance needed to support its current stock price, according to a Dow Jones press release.

The Dow Jones RBP indexes are built on rules-based analytics, which include RBP probability scores supplied by Transparent Value.

Each of the new indexes measures 100 U.S. stocks. Equities in the Dow Jones RBP U.S. Large-Cap Growth and the Dow Jones RBP U.S. Large-Cap Value indexes are selected using RBP probabilities and components from the Dow Jones U.S. Large-Cap Growth Total Stock Market and the Dow Jones U.S. Large-Cap Value Total Stock Market indexes, respectively. The Dow Jones RBP U.S. Large-Cap Core index measures 50 growth and 50 value stocks based on their style scores and RBP probabilities within their respective universes.

The Dow Jones RBP U.S. Dividend index consists of large-cap and mid-cap stocks selected on indicated dividend yield and RBP probabilities, and they are drawn from all component stocks of the Dow Jones U.S. Large-Cap Total Stock Market index and the Dow Jones U.S. Mid-Cap Total Stock Market index at the time of the semiannual review, respectively.

The new indexes are reviewed quarterly and regularly for unusual events such as delistings, bankruptcies, mergers and takeovers. Changes to the index composition and related weight adjustments are made as soon as they are effective.

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