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An Index Approach to World Cup Success

How Indexing Works for Carbon Markets

Exploring Active vs. Passive in Latin America

S&P ESG High Yield Dividend Aristocrats Index – Adding a Layer of Sustainability via ESG Screening

Diversification Beyond Borders

An Index Approach to World Cup Success

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Sean Freer

Director, Global Equity Indices

S&P Dow Jones Indices

Football fanatics across the globe are watching closely to see which of the 32 countries that qualified for the FIFA World Cup finals in Qatar will raise the trophy in glory.

Every four years, the global spotlight scrutinizes each nation’s footballing prowess (or lack thereof). Beyond coaches, pundits and tacticians, the World Cup gives plenty of fodder for social scientists, economists and even political theorists to analyze and attempt to identify trends or patterns that may contribute to World Cup success.

If tournament success were down to population size, China and India would have surely won the cup by now. If the economy size or GDP per capita were a meaningful metric, then the U.S., Luxembourg or Singapore would surely have come close to winning the coveted cup by now. The countries topping the UN’s Human Development Index (Switzerland, Norway and Iceland) haven’t won a World Cup either. In fact, a number of these notable mentions rarely qualify for the finals.

S&P Dow Jones Indices (S&P DJI) certainly does not purport to have isolated the secret ingredient for World Cup success, but we do know indices and are keenly following competing countries that are included in the S&P Global BMI (Broad Market Index) and S&P Frontier BMI.

S&P DJI Market Classifications

The S&P Global BMI consists of 49 markets, of which 25 are classified as developed and 24 as emerging, while the S&P Frontier BMI consists of 31 additional markets. The S&P Global BMI comprises over 14,000 companies and covers all publicly listed equities with float-adjusted market values above USD 100 million that meet minimum liquidity criteria. The S&P Frontier BMI is designed to measure the performance of relatively smaller and less liquid markets.

Of the 32 countries that have qualified for the 2022 World Cup finals, 20 are included in the S&P Global BMI, covering 87.7% of the index’s market capitalization; 15 of these are considered developed, while the other 5 are emerging. Seven other competing countries are represented within the S&P Frontier BMI, covering just over a third of the index’s market capitalization, while the remaining five qualifiers do not currently meet frontier market criteria.

Developed Markets Have Better FIFA Rankings

Looking at the average FIFA ranking of each segment, the developed cohort has the lowest at 15.8, followed by the countries not classified in S&P DJI’s global equity index series at 25.8. Despite having the top-ranked nation (Brazil), the emerging cohort’s average rank is 28.2, which is higher than the frontier cohort at 27.1.

Developed Markets Overrepresented at the World Cup Finals

FIFA membership consists of over 200 nations and associations, and only 25 of those are classified as developed markets by S&P DJI. However, these nations1 represent over 40% of the countries (15 of 32) that qualified for the 2022 finals and over 60% of the teams that progressed to the round of 16.

Since the S&P Global BMI launched in 1989, there have been eight World Cup finals, two have been won by an emerging market—Brazil—and the other six by countries classified as developed markets—Germany, France, Italy and Spain.

While Brazil is the favorite to be in the World Cup Final on Dec. 18, 2022, form aside, it seems that countries from the developed markets cohort will have the highest likelihood of World Cup success. While the frontier cohort has bucked the trend outperforming emerging.

Notable Outperformers and Underperformers

Given each country’s stature in the S&P Global BMI by composition weight and number of companies, Canada, Germany and Denmark would be seen as underperformers in terms of global market stature and footballing prowess by not progressing beyond the group stage at this year’s World Cup.

While Argentina, Brazil and Croatia have outperformed their market stature, they are highly placed in their FIFA rankings—so this isn’t unexpected. Surprising outperformers would be Morocco, Ghana and Senegal based on their limited investable market stature.

S&P Dow Jones Indices Market Classification Methodology can be found here:

1 The U.K. is classified as one developed market but represented in multiples associations within FIFA—England, Northern Ireland, Gibraltar, Scotland and Wales.

The posts on this blog are opinions, not advice. Please read our Disclaimers.

How Indexing Works for Carbon Markets

How are innovative indices tracking compliance and voluntary carbon futures markets bringing greater transparency to the energy transition? S&P DJI’s Jim Wiederhold and KraneShares’ Luke Oliver discuss how first-to-market benchmarks are democratizing access to global carbon markets.

The posts on this blog are opinions, not advice. Please read our Disclaimers.

Exploring Active vs. Passive in Latin America

How do active managers in Latin America stack up to their benchmarks? Discover the key takeaways from the latest SPIVA Latin America Scorecard with S&P DJI’s Tim Edwards and Ericka Alcántara.

The posts on this blog are opinions, not advice. Please read our Disclaimers.

S&P ESG High Yield Dividend Aristocrats Index – Adding a Layer of Sustainability via ESG Screening

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George Valantasis

Associate Director, Factors and Dividends

S&P Dow Jones Indices

High-dividend-yielding stocks have been prevalent in 2022, as rising interest rates have put downward pressure on long duration assets. At the same time, market participants are increasingly seeking to align investments with their personal and societal values. The S&P ESG High Yield Dividend Aristocrats® Index may be a strategy that checks both of these boxes. Launched in March 2021, this index strives to achieve low tracking error and comparable dividend yield to the S&P High Yield Dividend Aristocrats Index while incorporating meaningful ESG improvement.

Combining Dividend Aristocrats and ESG Methodology

The S&P ESG High Yield Dividend Aristocrats Index combines the S&P Dividend Aristocrats methodology with a sustainability overlay. To qualify for the index, a company must first have consistently increased dividends every year for at least 20 years. This initial filter tilts the index toward selecting higher-quality companies, since the ability to consistently grow dividends over a long period of time can be an indication of financial strength, discipline and durable earning power.

Next, multiple ESG screens are applied. The index excludes companies in the lowest quartile of S&P DJI ESG Scores. Additional ESG exclusion reviews are conducted quarterly based on business activities, as well as United Nations Global Compact (UNGC) breaches. These ESG screens serve to enhance the already stringent qualifications of the Dividend Aristocrats methodology.


Since January 2011, the S&P ESG High Yield Dividend Aristocrats Index has generated a 12.92% annualized return versus 11.87% for the S&P 1500TM, while exhibiting less volatility.

Recently, the outperformance of the S&P ESG High Yield Dividend Aristocrats Index versus the S&P 1500 has been even more pronounced. Year-to-date, the S&P ESG High Yield Dividend Aristocrats Index has outperformed the benchmark by 15.25%. One reason for this is that high-yielding indices, mainly through their lower durations, offered greater protection against rapidly rising interest rates compared to the benchmark.

Comparison of S&P DJI ESG Scores and Dividend Yields

Exhibit 3 shows that the S&P ESG High Yield Dividend Aristocrats Index offered notable S&P DJI ESG Score improvement over the S&P High Yield Dividend Aristocrats Index. The S&P DJI ESG Score improved by 11 points per year on average, revealing an annual increase of over 20%.

The S&P ESG High Yield Dividend Aristocrats Index and S&P High Yield Dividend Aristocrats Index have had comparable yields historically, and both have held a significant yield advantage over the S&P 1500 (see Exhibit 4). Over the period examined, the average annual dividend yields for the S&P ESG High Yield Dividend Aristocrats Index, S&P High Yield Dividend Aristocrats Index and S&P 1500 were 2.73%, 2.88% and 1.84%, respectively.

Exhibit 5 shows the average year-over-year annual percentage dividend growth rate for current S&P ESG High Yield Dividend Aristocrats Index constituents. The average year-over-year dividend growth rate over the past 20 years was 11.26%, far surpassing the average year-over-year U.S. CPI rate of 2.35% over the same period.


For market participants who are looking for high-quality companies that align with their personal values, as well as a history of stable and attractive dividend payments, the S&P ESG High Yield Dividend Aristocrats Index may be an option to consider.

The posts on this blog are opinions, not advice. Please read our Disclaimers.

Diversification Beyond Borders

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Elizabeth Bebb

Director, Factor & Dividend Indices

S&P Dow Jones Indices

Academic theorists often assert the decision of where to invest as more important than the decision of what to invest in. Studies suggest that up to 90% of investment returns are attributable to location.

Regional equity indices represent different combinations of geographic and sector exposure. These differences can potentially improve the diversification benefits available when combining indices. We compare the underlying sector and geographical revenue exposures of two S&P DJI regional indices and show that utilizing combinations of equity indices may improve an investor’s risk/return potential, as well as reduce home bias (an anomaly whereby asset allocators overweight their domestic stock market).

What Is the S&P 500®?

Widely considered the primary gauge of the U.S. large-cap stock market, the S&P 500 is a float-adjusted, market-capitalization-weighted index that reflects 500 of the largest, most well-known companies domiciled in the U.S. The index incorporates a range of inclusion criteria, including a profitability screen. The S&P 500 represents over 80% of the total U.S. market capitalization as measured by the S&P Total Market Index (TMI). Many of the index’s constituents have a major global presence, with revenues generated in a wide range of foreign countries. Therefore, despite its U.S. focus, the S&P 500 provides insight into companies with a diverse revenue base across geographies and sectors.

Europe versus the U.S. – Differences in Exposure

The S&P Europe 350® is a European-centric counterpart to the S&P 500. The index focuses on the largest blue-chip companies domiciled in 16 European countries, weighted by float-adjusted market capitalization based on a range of inclusion criteria.

We use FactSet Geographic Revenue Exposure (GeoRev™) data, adjusted for sales-weighted exposure, to understand the geographic spread of constituent revenues for both the S&P 500 and the S&P Europe 350. For example, companies in the S&P 500 generate around 70% of their revenue in the U.S., while companies within the S&P Europe 350 generate only 24% of their revenue from the same location.

Exhibit 1 compares the S&P 500 and the S&P Europe 350. It shows that the revenues of the S&P Europe 350 have a greater tilt away from the U.S. and toward Europe than the S&P 500. Therefore, a strategy combining the two indices may lead to a more diverse geographic revenue exposure.

In practice, industries are not distributed evenly across geographies. Exhibit 2 shows that the S&P Europe 350 has significant weight in Industrials and Health Care, reflecting the strong franchises in these sectors in countries such as Germany and France for Industrials and the U.K. for Health Care. The S&P 500 has a higher weight in Information Technology and Communication Services than the European index.

Exhibit 3 provides the annualized total return and the return/risk ratios for various hypothetical combinations of the S&P 500 and the S&P Europe 350 over different periods ending in September 2022. Exhibit 4 draws the efficient frontier for different combinations of S&P Europe 350 and S&P 500 allocations. The results show that over longer time periods, a hypothetical combination of European and U.S. indices offered a higher return and more favorable risk profile than the S&P Europe 350 investment alone, perhaps reflecting the benefits of diversification.


The posts on this blog are opinions, not advice. Please read our Disclaimers.