S&P Dow Jones Indices (S&P DJI) has launched the S&P Brazil Sector Gross Domestic Product (GDP) Weighted Index, a new benchmark designed to measure the largest and most liquid stocks listed on the BM&F Bovespa (BVMF) weighted proportionately to the published Brazilian sector GDP figures.

The new index has also been designed to potentially serve as the basis for index-based investment products, including structured solutions and exchange-traded products (ETFs).

“Brazil’s equity market is highly concentrated in financial services and natural resource companies, thus traditional market capitalisation-weighted equity indices are not representative of the Brazilian economy,” said Michael Orzano, director of global equity indices at S&P DJI. “By weighting the constituents according to their GDP sector weights, the S&P Brazil Sector GDP Weighted Index provides investors with a transparent benchmark that reflects the growing, dynamic industries underrepresented in market cap-weighted indices.”

The underlying universe for the S&P Brazil Sector GDP Weighted Index is all stocks from the S&P Brazil Broad Market Index (BMI).

The Global Industry Classification Standard (GICS) sector for each of the 100 unique companies is mapped to the following Brazilian GDP sectors: agriculture, industrials, financial services and non-financial services. The sectors are then weighted according to their annual GDP figures.

This is the first index that BVMF and S&P DJI have brought to the Brazilian market following the announcement last week that both firms had agreed to launch and co-brand equity indices for the Brazilian marketplace.

Aside from sector indices, BVMF and S&P DJI are also considering factor-based indices, such as dividend, volatility, multi-asset and risk control indices.

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