Nasdaq OMX Group, the parent company behind the first electronic
stock market and a well-established index provider, is about to
become one of the largest dividend-focused index providers in the
market, with an agreement to acquire Mergent Inc.'s index business,
Mergent is the firm behind the Dividend Achievers Indexes, the
same roster of dividend-focused benchmarks underlying
such as the $14 billion Vanguard Dividend Appreciation ETF
(NYSEArca:VIG), as well as a number of Invesco PowerShares funds
including the $285 million PowerShares Dividend Achievers Portfolio
(NYSEArca:PFM) and the $722.7 million PowerShares International
Dividend Achievers Portfolio (NYSEArca:PID).
Terms weren't disclosed, but Nasdaq noted in a press release
that the transaction will be a nonmaterial event. The deal is
likely to be closed sometime during the fourth quarter.
All in all, some 19 strategies with more than $16 billion are
currently tied to Mergent 's dividend-focused indexes, a Nasdaq
representative told IndexUniverse. The deal would boost Nasdaq
index-linked ETF assets under management by 30 percent, according
to exchange estimates.
Nasdaq's move will make it one of the largest dividend-themed
index providers in the market, at a time when the pursuit of yield
is getting a lot of attention. Many fund providers have rushed to
design exchange-traded products that cater to growing investor
appetite for income-generating strategies at a time of compressed
yields in more traditional fixed-income products.
The Federal Reserve's recent decision to pump more money into
the economy and keep interest rates near zero at least through 2015
ensured that demand for alternative sources of income-such as
dividend-paying stocks-will likely remain high.
"As the investment landscape continues to evolve, we see the
increased need for indexes to provide rules-based and transparent
benchmarks for dividend- and income-themed investments," Nasdaq's
Executive Vice President John Jacobs said in a press release.
Mergent has been following companies with solid dividend track
records since the late 1970s.
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