Eurex has launched new futures and options based on the STOXX Global Select Dividend 100 Index as the segment continues to rise in popularity.
Volumes and open interest have risen substantially on the exchange’s single stock dividend futures over the past five years as it looks to make the case for dividend products to be an asset class in its own right.
Along with the single stock products, Eurex’s index suite consists of the DivDAX and Euro STOXX Select Dividend 30 indices.
The new STOXX Global Select Dividend 100 Index offers enables the market to invest into 100 high dividend-yielding companies across North America, Europe and Asia Pacific.
“The STOXX Global Select Dividend 100 Index was launched in 2007 and has been one of the first innovative smart beta concepts that STOXX has brought to the market,” said Hartmut Graf, chief executive officer, STOXX Limited.
“By weighting the components in this index by dividend yield rather than market cap, investors are able to participate directly in the performance of high-dividend paying companies.”
As of June 2015, nearly 1.7 billion in assets are invested in ETFs that are based on the STOXX Global Select Dividend 100 Index.
Dividend futures have been gradually rising in popularity among the buy-side since the financial crisis, gaining pace rapidly on their OTC equivalents.
Eurex launched the first set of exchange-traded dividend contracts back in 2008, before releasing single-stock offerings in 2010. Similar products are also offered in Europe on NYSE Liffe and Borsa Italiana.
Initially, the products were being used mainly by banks’ prop desks, private banks and hedge funds, before a limited but growing number asset management companies adopted them too. The contracts are attractive to large players looking to mitigate exposures to individual companies.