The aim of the index is to create a robust compounding machine through the creation of a portfolio of companies selected solely on the basis of their ability to provide a high quality income stream to their owners. The relatively high yield - currently 4.5% compared to an historic average of 5% - gives a solid basis upon which to compound capital over time. The requirement that selected businesses enjoy high quality economics ensures dividends are unlikely to be cut. The nature of dividend flows as a share of revenues suggest they will tend to rise, thus affording yield hungry investors a degree of inflation protection.
The Index comprises 75 to 125 stocks from the universe and gathers stocks that (i) are listed on a regulated market of an Eligible Country, (ii) are not financial companies, and (iii) have a free float adjusted market capitalization of at least US$ 3bn. The stock selection process is performed in three steps:
1) Selection of the stocks with a high quality score (greater than 7) according to Piotroski’s 9 quality factors.
2) Selection of the 40% best scoring stocks in respect to balance sheet.
3) Selection of stocks with high dividend yield.
The SG Global Quality Income Index (USD - NTR) (the “Index”) is the exclusive property of Societe Generale. Societe Generale has signed a contract with Solactive AG wherein Solactive AG undertakes to calculate and maintain the Index. The Index is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade mark or the Index Level at any time or in any other respect.