S&P Dow Jones Indices launches S&P 500 Buyback index

By Toni Weeks

San Luis Obispo, Calif., May 6 - S&P Dow Jones Indices has launched the S&P 500 Buyback index, according to a press release.

The index is designed to measure the performance of the top 100 stocks with the highest buyback ratio in the S&P 500 index during the last 12 months, the release said.

The buyback ratio is defined as the ratio of the total cash put toward buybacks in the trailing year and the market capitalization of the company as of a reference date. Constituents are equally weighted, and the index is rebalanced quarterly.

"Buybacks can be seen as an important indicator of corporate health," senior director of Strategy Indices Vinit Srivastava said in the release. "Much like dividends, corporate buybacks is another method that companies use to return value back to shareholders.

"In 2012, S&P 500 companies bought back $399 billion worth of stock and continue to hold record amounts of cash."

New York-based S&P Dow Jones Indices LLC provides a variety of investable and benchmark indexes.

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