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Impact Investing

IPE special report May 2018

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IN.SECTs get country cousins

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European Benchmarks, the company behind the IN.SECTs European sectoral indices, is launching a new family of indices based on regions. The first out is IN.flanders, and covers the Flemish part of Belgium.
Eurobench was asked to create the index by the Flemish Employers’ Association (VEV). “The Flemish Employers’ Association wanted to give their employees options, but they are not quoted themselves,” says Eurobench spokesman Koen Wuyts.
IN.flanders consists of 100 shares, which the provider says are local as well as foreign. The index is constructed and weighted according to the total number of employees – in the case of non-Flemish companies, this is the taken as the number of staff in Flanders, and for Flemish companies, the consolidated number is used.
On the basis of the index, KBC Asset Management has set up an investment instrument with BEVEK status – an open-ended investment company. KBC Derivatives is launching options based on that fund, says Wuyts.
The index was to be weighted according to employee numbers rather than market capitalisation because it was considered a better motivator for employees. “The philosophy behind it was the VEV wanted to create an index which has a link to the workforce,” says Wuyts. “But there is a lot of research which shows that companies focusing on growth in general rather than cost-cutting perform better in the long term,” he adds.
More regional indices will follow. Eurobench says it is currently in negotiations for an index based on businesses in the Netherlands, and the next step should then be France.

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