As an income based version of BET index, BET Total Return index (BET-TR) closed 2014 with an increase of 57.5% compared to the base date, September 2012, and of 14.5% on 1YR base. BET-TR is the first total return index launched by BVB, based on the structure of market reference index BET. With a market capitalization of approx. RON 26 bn, BET-TR tracks the price changes of its component shares and is adjusted to also reflect the dividends paid by constituent companies. In 2014, 6 member companies of BET-TR paid dividends from the previous year profits, resulting in an average dividend yield of approx. 9%.
Launched on September 22, 2014, and calculated retroactively for 2 years, the index was created as an investible underlying for structured products and exchange traded derivatives, as well as benchmark for the funds with exposure on Romania.
The calculation formula of BET-TR takes into account the level of free float of each index constituent (via the free float factor) and sets a limitation of max. 20% for the weight of a company in the index (via the representation factor). BET-TR complies with the selection criteria and calculation methodology applied for BET. Starting Jan 2015, the quality of reporting & IR activities is also an eligibility criterion for the index member companies, which is meant to increase its investibility.
BET-TR provides investors with more information and encourages companies to promote a stable dividend policy. The draft of the new BVB Corporate Governance Codes entices all listed companies to elaborate on a dividend policy, as a set of directions related to the distribution of net profit that the company declares to follow, and publish it on the corporate website. The index illustrates the attractiveness of the local capital market, accounting not only for the capital gains, but the total return of its constituents.
Like all indices of BET family, the index is rebalanced quarterly, after the close on the third Friday of the quarter-ending month. Investors wanting to track a complete picture for the overall performance of BVB blue chip companies can find more info about BET-TR and BET family indices on the dedicated Indices section of the BVB website.