Industry Updates

FTSE Russell launches global tech “SuperTheme” index

The multi-theme index almost tripled the returns of the S&P 500 over the past five years

Jamie Gordon

Robot arm holding semiconductor

FTSE Russell has launched a range of single technology thematic indices and one “SuperTheme” index offering broad exposure to several subsectors in the tech industry.

The new benchmarks include the catch-all FTSE Global Technology SuperTheme index and then the more targeted single theme baskets, such as the FTSE Global Artificial Intelligence index, FTSE Global Robotics & Automation index and the FTSE Global Fintech & Blockchain index.

The firm said its methodology is based on its Dynamic Classification Algorithm, which uses natural language processing (NLP) and a set of keywords to identify relevant companies for each theme.

The tech “SuperTheme” index is liquidity-weighted and based on the FTSE Global All Cap index. It offers exposure to themes including artificial intelligence, cloud computing, cybersecurity, fintech, blockchain, future transportation, internet of things, robotics, automation, video gaming, virtual reality and others.

Each constituent is meant to be capped at a weighting of 5%, however, the benchmark currently has four US large cap tech names with allocations exceeding this amount. Also, the benchmark’s top seven holdings are all popular US tech names found in many core indices – and make up a combined 35.8% of the “SuperTheme” basket.

The index provider said its diverse tech benchmark returned 271% during the five years through the end of August, more than double the 108% yielded by the tech-heavy S&P 500.

Emerald Yau, head of equity index product management, Asia, at FTSE Russell, commented: “We have sought to identify longer-term structural trends with a sufficiently diversified pool of eligible constituents. 

“Our thematic offering combines an unconstrained, country and sector agnostic approach to index construction, with a disciplined and transparent governance framework.” 

In July, the firm debuted eight climate indices created in partnership with Brunel Pension Partnership.

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