- WSE has published the WIG20TR (WIG20 Total Return) index for two years.
- The index has since gained 10.25%; it has gained 98.32% since the end of 2004, the start date of calculation of the index historical value.
- Publication of WIG20TR reflects the Exchange’s efforts aiming to build a culture of long-term investments.
WSE started to calculate and publish WIG20TR on 3 December 2012. Unlike the price index WIG20, WIG20TR is a total return index, which means that its calculation takes into account both the prices of transactions and income from dividend and issue of new shares with subscription rights. The rules for the composition of the WIG20TR index portfolio, the weights of its participants, and changes to the list of participants (periodic and extraordinary corrections) are the same as for WIG20.
With the start of publication of WIG20TR, WSE provided the investors with historical values of the index as of 31 December 2014. To ensure the comparability of the price index and the total return index, it was assumed that the values of both indices at the start date were equal.
Figure 1. Comparison of WIG20 and WIG20TR
According to WSE’s calculations, WIG20 gained 24.78% in nearly a decade while WIG20TR gained 98.32%. The index gained 10.25% since the start of publication.
Data for nearly 10 last years also provide other information on the past and current performance of WIG20 and WIG20TR. In 2005 – 2008, WIG20TR over performed WIG20 only modestly. Both indices were strongly correlated and their return rates were nearly equal. However, since 2009, the differential between the values of the price index and the total return index increased sharply, especially in the last two years. During the market peak in September 2014, WIG20TR was the highest since December 2007: it gained more than 31 percent since the mid-2011 low.
A comparison of the WIG20 price index and the total return index affords a different perspective on market conditions on the exchange. It demonstrates to investors not only how the prices of their shares change but also how WIG20 would perform if it included dividends paid. As a result, WIG20TR may encourage individual investors to invest on the Exchange in the long term.
“WIG20TR is a more complete reflection of the situation of the largest stocks on WSE. In an environment of lateral trend and low interest rates, additional income streams are more in demand for investors. Therefore, earning from dividends offers an interesting investment alternative also for Polish investors,” said PaweÅ‚ Tamborski, President of the Management Board of WSE.
About WIG20TR:
WIG20TR has been calculated since 3 December 2012 on the basis of the portfolio of shares of the 20 biggest and most liquid companies listed on the WSE Main Market. Consequently, the WIG20TR index portfolio is the same as the WIG20 index portfolio; however, WIG20TR is calculated taking into account income from shares, in particular dividends and subscription rights. The differences between WIG20TR and WIG20 include the name, the publication mode, and the approach to corporate actions. All the other rules of index construction are consistent with the WIG20 index methodology.
The index base date is 31 December 2004 and the base value is 1,960.57. The index is revised on a quarterly basis. Similar to WIG20, periodic modifications of the WIG20TR index portfolio are made after the trading session on the third Friday of June, September and December and the annual revision after the trading session on the third Friday of March. WIG20TR is published three times per day at 11:15, 15:15 and after trading session close.
More about the index: http://www.gpw.pl/indeksy_gieldowe?isin=PL9999999425&ph_tresc_glowna_start=show