FTSE Group and Institutional Shareholder Services today jointly launched a set of corporate governance indexes. The FTSE ISS Developed CG index covers 24 developed markets, including the United States, and consists of 1,350 stocks with a total market capitalization of $17.6 trillion. The FTSE ISS U.S. CG index has 415 stocks with a total market cap of $9.048 trillion. The other indexes cover Japan, the United Kingdom, the euro zone and Europe.
"We would expect to license index funds ... by early next year," said a spokesman for FTSE. The firms will also provide customized corporate governance indexes.
A five-year back test, beginning Sept. 30, 1999, shows the corporate governance indexes performing almost identically with their benchmark counterparts, the FTSE indexes, according a report released today. A cumulative return comparison wasn't available.
"The prime objective behind the indexes is to exclude the highest corporate governance risk companies in each separate market," the report added.
Separately, Glass Lewis, a competing proxy advisory firm, plans to launch its Glass Lewis Shareholder Rights Index on May 15, said Loren Schaffzin, Glass Lewis spokeswoman. Glass Lewis is collaborating with Standard & Poor's and Lucian Bebchuk, professor of law, economics and finance at Harvard Law School, to produce that corporate governance index.
