NEW YORK, Feb. 21, 2008 (PRIME NEWSWIRE) -- Dow Jones Indexes, a leading global index provider, today announced the launch of the Dow Jones Real Return Target Date Indexes. The new indexes are designed to serve as benchmarks for lifecycle portfolios that start out aggressively to grow assets and end with a conservative mix of investments based on the portfolio's "target date."
Each index in the series represents a mix of sub-indexes representing stocks and bonds, Treasury Inflation Protected Securities (TIPS) -- guaranteed by the U.S. government to pay interest above the rate of inflation -- as well as commodities and real estate, which potentially counterbalance inflation.
"We were the first index provider to create benchmarks for retirement portfolios, first with the Dow Jones Relative Risk Indexes in 2001 and then the Dow Jones Target Date Indexes in 2005. As more plan sponsors pursue target date strategies in light of the Pension Protection Act, market participants require more choice when selecting their benchmarks. The Dow Jones Real Return Target Date Indexes are differentiated because they include a diversified mix of asset classes as well as measure inflation-adjusted performance, or the 'real' return, of a target date portfolio," said Michael A. Petronella, president of Dow Jones Indexes.
Industry experts were consulted on the design of the Dow Jones Real Return Target Date Indexes. An advisory board is currently being formed for continued oversight of the indexes.
The Dow Jones Real Return Target Date Indexes comprise 11 indexes, nine with target dates in 5-year intervals out to 2045, and a Dow Jones Real Return 40+ Index and Dow Jones Real Return Today Index. Each index is a composite of sub-indexes that represent stocks, bonds, TIPS, commodities and real estate securities. The sub-indexes are the Dow Jones Wilshire Global Total Market Index(sm), Lehman Aggregate Bond Index(sm), Lehman U.S. TIPS Index(sm), Dow Jones-AIG Commodity Index(sm) and Dow Jones Wilshire Real Estate Securities Index(sm).
The component asset classes are weighted within each Dow Jones Real Return Target Date Index to measure a targeted level of risk. Stocks and bonds are classified as nominal assets with high- and low-risk profiles, respectively. Real estate securities and commodities are considered real assets with high-risk profiles, and U.S. TIPS are considered real assets with a low-risk profile.
Over time the weights are adjusted based on predetermined formulas to adjust the risk level systematically as the index's target date approaches. For example, the Dow Jones Real Return 2045 Index includes approximately 90% component allocation to the high-risk assets (equities, real estate and commodities). When the index reaches its target date, the index composition will have changed to about 70% in the low-risk component assets (bonds, U.S. TIPS). The index will then convert into the Dow Jones Real Return Today Index, which maintains constant exposure to the conservative asset allocation.
The equity, real estate securities and bond portions of the Dow Jones Real Return Target Date Indexes are weighted by market capitalization. The indexes are reviewed on a quarterly basis. Back-tested estimated history is available back to January 2000(1).
The Dow Jones Real Return Target Date Indexes join the Dow Jones Portfolio index family, which includes the Dow Jones Relative Risk and Dow Jones Target Date indexes. As of the end of 2007, there are $3.621 billion USD in assets tied to the Dow Jones Target Date Indexes, managed by State Street Global Advisors and Wells Fargo Advantage Funds.
For more information on the Dow Jones Real Return Target Date Indexes, please visit www.RealReturnIndexes.com.
Journalists may e-mail questions regarding this press release to PR-Indexes@dowjones.com or contact Dow Jones Indexes/STOXX press office:
New York: +1-212-597-5720 Frankfurt: +49-69-29-725-290
Note to Editors:
About Dow Jones Indexes
A full-service index provider, Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average, Dow Jones Indexes also is co-owner of the Dow Jones STOXX indexes, the world's leading pan-European indexes, and together with Wilshire Associates, provides the Dow Jones Wilshire Global Index family, which is anchored by the Dow Jones Wilshire 5000 and covers more than 12,000 securities in 59 markets. Beyond equity indexes, Dow Jones Indexes maintains a number of alternative indexes, including measures of the hedge fund and commodity markets. Dow Jones indexes are maintained according to clear, unbiased and systematic methodologies that are fully integrated within index families. www.djindexes.com
Dow Jones & Company (www.dowjones.com) is a News Corporation company (NYSE:NWS) (NYSE:NWS.A) (ASX:NWS) (ASX:NWSLV) (www.newscorp.com). Dow Jones is a leading provider of global business news and information services. Its Consumer Media Group publishes The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review. Its Enterprise Media Group includes Dow Jones Newswires, Dow Jones Factiva, Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones Financial Information Services. Its Local Media Group operates community-based information franchises. Dow Jones owns 50% of SmartMoney and 33% of STOXX Ltd. and provides news content to radio stations in the U.S.
The Dow Jones logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4578
(1) The Dow Jones Real Return Target Date Indexes were first published on February 8, 2008. All estimated daily historical closing prices prior to that date are based on back-testing (i.e., calculations of how the index might have performed in the past if it had existed). Back-tested performance information is purely hypothetical and is solely for informational purposes. Back-tested performance does not represent actual performance, and past performance is not indicative of future results.