S&P Indices and TMX Group Inc. Friday announced the launch of an equal weight version of the S&P/TSX composite index providing Canadian investors with a new and innovative approach to tracking the performance of the principal broad-based index for the Canadian market.

“The S&P/TSX composite equal weight index is designed to meet clients’ needs for benchmarking strategies that require a size-neutral index compatible with the S&P/TSX composite index. An equally weighted index provides investors with a tool that will enable size, style, and sector comparison,” says Abigail Etches, director at S&P Indices.

The new index is the headline index in the S&P/TSX equal weight index family. In 2009, S&P Indices introduced the S&P/TSX equal weight indices, which are made up of a series of equal weighted headline and industry indices. The index calculations are determined according to the divisor-based methodology applied to the S&P/TSX Indices.

As a result of equal weighting, the S&P/TSX composite equal weight index tends to have a higher exposure to sectors with small companies than the S&P/TSX composite index. Relative performance of the two indices will also differ due to different sector exposure and risk and return profiles in different market cycles.