FTSE Group and Conflict Securities Advisory Group will introduce a series of terror-free indexes Monday, screening out 222 companies, Jerry Moskowitz, president of FTSE Americas, said today.
FTSE CSAG Terror-Free Index Series will apply CSAGs screening to the FTSE All-World ex-U.S. index and its component FTSE All-World Developed ex-U.S. and FTSE All-World Emerging ex-U.S. indexes. It will exclude companies with non-humanitarian business ties to Iran, Sudan, Syria and North Korea that expose them to global security risk. Companies identified as involved in humanitarian business, mainly pharmaceuticals and food, will stay in the indexes.
U.S. companies arent involved in the indexes because U.S. law already prohibits doing business with these countries, Mr. Moskowitz said.
The screen reduces the FTSE All-World ex-U.S. index to 1,970 companies with a combined market capitalization of $12.6 trillion, from 2,192 companies with an $18.3 trillion market cap, according to FTSE data.
FTSE will release the names of excluded companies when the new indexes are unveiled next week, Mr. Moskowitz said. The new indexes were created to help public pension funds, endowments and other institutions comply with requirements on divestment and to meet other investor demand, Mr. Moskowitz said.
Northern Trust licensed the indexes for commingled funds and agreed to create an ETF, pending license negotiation and SEC approval, said Mr. Moskowitz, noting FTSE is also seeking license deals with other investment companies. Alexis Geocaris, Northern Trust spokeswoman, declined to comment.