NSE Introduces Pension Index


Monday, July 06, 2015 9.38AM/NSE
The Nigerian Stock Exchange in another move to deepen the market has introduced the Pension Index. The Index values, which would be available as from January 2, 2013 (December 31, 2012 = 1000) was exposed to the investing public on Thursday, July 2, 2015.

The creation of the NSE Pension Index will encourage the development of other products such as Exchange Traded Products (ETP’s) and Index Futures. Also, the Index, provide a tracking mechanism for PFAs, CPFA and others that follow the PENCOM guidelines. It can act as a benchmark for measuring performance and reporting performance to RSA Holders.

The NSE Pension Index includes the top 40 companies in terms of market capitalisation and liquidity. Adjusted Market Capitalisation of a listed company is the number of its listed shares, multiplied by the closing price of that company, multiplied by a capping factor. Aside from the included stocks being 40, the NSE Pension index also possess the following features:

1.    The Stocks are picked based on their market capitalization from the most liquid sectors.

Stocks and sectors were selected in line the Pension Reform guideline

Companies to be included must have Free Float Factor of at least 5%. This is the first index on the NSE that gave consideration to Free Float

Companies must have paid dividend/bonus at least once in the last five years

It is a Total Return Index so that it can accurately measure equity portfolio performances, which capture returns from dividends, price changes and realized gain

Total Return Index will only be available end of day. There will be no intra-day values

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