Natixis has partnered with Nasdaq Inc. to craft a new index that tries to address the market-capitalization bias found in traditional indices, potentially paving the way for a smart beta exchange traded fund diversifier for Nasdaq-100 investors.
“Natixis is delighted to partner with Nasdaq in creating a pricing-friendly, rules-based index linked to the Nasdaq-100 universe for structured notes investors,” Dennis Shikar, Head of Equity Markets Americas at Natixis, said in a note. “This partnership illustrates our commitment to providing smart and unique equity solutions that will expand our offerings to both our distributors and institutional clients.”
The news was announced at the NASDAQ exchange Monday where Natixis rang the opening bell.
The newly created Nasdaq-100 Target 25 Index will select 25 of the 100 companies included in the benchmark NASDAQ-100 Index that have smaller market capitalization, which have the highest free cash flow yields and are then equally weighted. The smart beta index will then replicate the performance of the total return version where dividends are reinvested and discounts a fixed dividend of 2.5% in order to calculate the excess return.