What Is the Dow Jones Global Titans 50 Index?
The term Dow Jones Global Titans 50 Index refers to an index that consists of 50 of the world's largest multinational corporations. These companies represent a number of different industries including technology, financials, health care, and consumer goods, and must generate a percentage of their revenue from foreign markets. Launched in 1999, the index is owned by S&P Global.
- The Dow Jones Global Titans 50 index is composed of 50 of the largest global companies that generate a sizable portion of their revenue in foreign markets.
- Companies are chosen based on their market capitalization, revenue, and net income rank.
- The highest weighting a constituent can have in the index is 10%.
- Since weightings are readjusted quarterly, companies are chosen for inclusion annually.
Understanding the Dow Jones Global Titans 50 Index
The Dow Jones Global Titans 50 Index was launched in 1999. It is one of many Dow Jones indices owned by S&P Global, each of which tracks different aspects of the economy. The original index—Dow Jones Industrial Average (DJIA)—specifically tracked industrial companies, since they were the major drivers of the economy when the index made its debut.
The Dow Jones Global Titans 50 Index selects companies for the index by calculating specific criteria such as each company's free-float market capitalization, revenue, and net income levels. Each company listed in the index earns revenue both domestically and internationally. In order to be included, though, they must make a sizeable portion of their revenue from foreign markets. These blue-chip companies trade individually on major exchanges around the world such as the New York Stock Exchange (NYSE), the Tokyo Stock Exchange, the Nasdaq, and the London Stock Exchange (LSE).
Investors can take invest in index funds and exchange-traded funds (ETFs) that track the DJGT 50 Index though a brokerage firm or a mutual fund company.
As of August 2020, the three largest sectors and their weighting were as follows:
- Technology: 44.7%
- Health care: 14.7%
- Consumer Services: 13.8%
The index reflects the shift in the global economy toward technology and services, and still includes manufacturing companies such as makers of autos, beverages, and software, and also incorporates software makers and various service providers.
The DJGT 50 Index is rebalanced every September and goes through regular reviews every March, June, and December . S&P recalculates and re-weights the index to account for changes in the float of member stocks. S&P calculates and reports the index's value in both U.S. dollars and euros.
Although the Dow Jones Global Titans 50 Index includes companies that are based in a number of countries, the majority are based in the United States. Some of the major names include Microsoft, Apple, Amazon, Alphabet, JP Morgan Chase, Johnson & Johnson, and Visa. As of August 2020, a total of 33 American companies were listed on the index. Eight British companies also made the list, as well as four from Switzerland. Other countries represented on the index had two or fewer companies.
Companies are excluded if they have more than 10 non-trading days over the last quarter, or generate less than 30% of their revenue in foreign markets—20% for current constituents. They are then ranked based on market capitalization, revenue, and net income. A final rank is provided by multiplying the float-adjusted market cap by 60%, revenue rank by 20%, and net income rank by 20%. The largest weight any single company can have in the index is 10%.