Solactive and Belfius are launching a smart beta strategy allowing investors to gain exposure to the digitalization trend affecting world economies and societies. Specifically, the new Solactive Digital Economy Index mirrors the performance of 50 European companies whose business models are likely to be impacted by the process of digitalization, while tilting the composition towards dividend-paying low- volatility stocks. The Index is licensed to Belfius Bank & Insurance for the issuance of structured products.
The ongoing digitalization of business processes and practices is changing how companies compete in the marketplace and how they interact with customers. In this context, adapting to the speed of technological change is crucial. Some studies have indeed shown that the lifespan of large companies is shrinking partly due to the failure to adapt to the speed of technological change in the economy*. Given the rapid advance of technology and the efficiency improvements associated with it, companies that are more effective at integrating a digital strategy might gain a competitive advantage over those that are more reliant on traditional ways of doing business.
Henning Kahre, Head of Research Solactive AG, commented: “With the Solactive Digital Economy Index, we are expanding our range of indices that combine smart beta elements with thematic investing. We are excited to be working with Belfius and offer investors exposure to a diversified basket of European companies active in industries subject to significant changes, which create opportunities.”
Geert Gielens, PhD, Chief Economist at Belfius Bank & Insurance, stated: “Digital is the buzz word nowadays and the corporate world will embrace it more and more as it leads to productivity gains when technology advances. The Solactive Digital Economy Index includes companies that perform strongly on this theme in such a way that it ties a sound principle such as economy wide diversification to low volatility and high dividend.”
The index includes European companies and is calculated as a price return index and is denominated in EUR. The weight of each of the 50 shares in the index is based on the inverse of their 12-month historical volatility, with a cap of maximum 10 stocks per digitalisation theme. The composition is readjusted quarterly.
*Innosight (2012). Executive Briefing Winter 2012. Creative Destruction Whips through Corporate America.