Nasdaq has gone socially responsible, sort of.
Microsoft Inc., Intel Corp., Cisco Systems Inc., JDS Uniphase Corp., Amazon.com Inc., eBay Inc., and Starbucks Corp. - all high-tech or retail Nasdaq companies - now will carry the imprimatur as socially responsible investments, part of the new social stock index jointly created by KLD Research & Analytics Inc. and Nasdaq Stock Market Inc.
The KLD-Nasdaq Social index has a market value of $2.7 trillion. Back-tested performance returns aren't yet available.
Executives at both organizations are talking with a number of institutions about creating index funds, exchange-traded funds, mutual funds and futures and options based on the new index, said John Jacobs, senior vice president-worldwide marketing and financial products at Nasdaq, Washington, and Zoe Van Schyndel, senior vice president-research products at KLD, Boston. They declined to name the prospects. KLD and Nasdaq will share fees generated from licensing, Ms. Van Schyndel added.
The market-value-weighted index is composed of 283 of the largest Nasdaq U.S. corporations. Ms. Van Schyndel, who came up with the idea of working with Nasdaq, said the index is large-cap, growth-oriented. KLD will apply an array of social and environmental screens to a universe of some 350 Nasdaq stocks that have a market cap of at least $1 billion, the minimum for inclusion in the new index. The index will be reconstituted every Nov. 30. The stocks in the KLD Nasdaq index will be screened daily for deletion from the index because of social changes. The index will be priced once a day.
The screening criteria include environment, employee relations and diversity, non-U.S. operations and involvement in the tobacco industry.
Other stocks in the new index include Dell Computer Corp., Yahoo Inc., Whole Food Market Inc., Staples Inc., Northern Trust Corp., BARRA Inc., T. Rowe Price Group Inc., Oracle Corp., Amgen Inc., and Qualcomm Inc. The index composition is as of Jan. 1; KLD will release updated lists between the Nov 30 reconstitution periods only to clients.