The main distinction in this Index is that companies’ weights in it are specified. EGX20 Capped Index rules limit the weight of each company to 10% maximum.
This is consistent with the fund investments rules (Capital Market Regulation issued by Law 95 of 1992). It also helps managers and shareholders to measure index companies’ performance.
The historical data of EGX20 Capped Index (starting from February 2003 with a basic value of 1000 points) reflecting a positive return for the index performance during the period since inception to date, it has doubled its level by about five-fold.
The index is reviewed twice a year; on the beginning of February (for the period 1/7 to 31/12) and the beginning of August (for the period 1/1 to 30/6). This review excludes companies that are not eligible, and do not meet the criteria. Index weights are reviewed twice a year; beginning of May, and beginning of November. The review is limited to the maximum coefficient relative weights of the companies listed in the index without a change in those companies.
1. Avoiding the problem of gaps between weights among companies in the Index.
2. Meeting the needs of market participants, especially fund managers. It will be a reference of their standards of investing in funds, which would contribute to the promotion for the funds’ certificates.
3. Raising the ETFs activity rates, expected to start working soon. EGX20 Capped index is an attractive tool that could be targeted to issue ETFs traded on.
4. This index is characterized by relative stability in its components at the full review process. Thus provides additional benefits to fund managers, most notably reducing the expenses of substituting the companies excluded from the index with new companies.
5. Enables EGX to exclude companies with low free float percentage.
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