PSE set to roll out Total Return Index

The Philippine Stock Exchange is set to roll out a brand-new index that factors in capital gains and dividend payments that investors generate from local blue-chip companies, allowing the assessment of total returns beyond mere stock price appreciation.

The total return index (TRI) tracking is the first among a suite of new indices which will be rolled out to diversify product offering.

“We have always been focused on investment gains from price appreciation. As done in other markets, we want to show the bigger picture on the profitability of stock and index investing,” PSE president and CEO Ramon Monzon said in a statement on Saturday.

A TRI gauges the overall return on the index, factoring both capital gains and dividend payments, if these dividends are reinvested back into the index.

To calculate the PSEi TRI, the bourse used 1,000 as base value and Dec. 28, 2007, as base year. Based on such computation, the PSEi TRI ended 2018 at 2,771.01, representing a 10-year cumulative gain of 417.6 percent. This outperformed the 298.6-percent rise in the PSEi from 2008 to 2018.

A five-year computation of the PSEi TRI shows a growth of 38.7 percent compared with the 26.8-percent rise in the PSEi.

The PSEi TRI has the same constituents as the PSEi and integrates regular and special cash dividends of index components on ex-date. If there are changes in the composition of the PSEi, they will be reflected in the PSEi TRI.