MSCI Dividend Points Indexes

CONTEXT

Dividends are an important component of equity returns, accounting for 40% of the total return of the MSCI World Index over the last 20 years. While contributing to total return, dividends also present a risk factor when trading index derivative products such as options, futures, and OTC products.

The MSCI Dividend Points Indexes offer a solution for investors that are looking to isolate dividend cash flows of the underlying MSCI parent indexes, whether it be for separating the components of total return or hedging dividend risk.

METHODOLOGY DESCRIPTION

The MSCI Dividend Points Index methodology accumulates regular cash distributions (cash dividends or capital repayments) of the underlying parent index on the ex-date of such distributions. This is aligned with the treatment of regular cash distributions within MSCI’s Total Return methodology, noted in the MSCI Index Calculation methodology. The distributions are aggregated in the Index and thus make up the total index performance of the MSCI Dividend Points Index.

The MSCI Dividend Points Indexes are calculated for a set period and are then reset to a value of 0. The annual indexes are calculated on a Gross Total Return basis, resetting to 0 on the market open of the Monday following the third Friday of December. In addition to the Annual, GTR indexes, MSCI offers other reset periods and variants on the parent indexes.