Irish Stock Exchange - ISEQ® Small Cap Index

Characteristics:
The Small Cap Index represents an asset class of it’s own, i.e. the smaller quoted companies. This type of asset class offers potential for growth which may not always seen in larger entities. It also represents an attractive asset class from the portfolio theory perspective; i.e. diversification into chosen smaller capitalisation stocks is likely to improve the risk return equation for investors.

The ISEQ® Small Cap Index is more representative of domestic economic performance compared to the ISEQ® Overall Index which contains internationally influenced constituents.

The ISEQ® Small Cap Index has a different volatility profile than the ISEQ® Overall Index. This is due to both liquidity and constituent weighting. As the Small Cap stocks are generally less liquid, changes in price can be relatively greater (in percent terms) than more liquid stocks, thus causing a relatively greater change in the Small Cap Index. Market Cap weightings are spread more evenly among Small Cap stocks than is seen in the ISEQ® Overall Index. Thus, a move in price in a large weighted Small Cap stock will have a smaller effect on the ISEQ® Small Cap Index compared to a corresponding move of a large weighted stock on the ISEQ® Overall Index.

ISEQ® Small Cap Index Inclusion Criteria:
Initially only companies which were included in the ISEQ® Overall Index on January 4th 1999 with a market capitalisation at that date of less than or equal to €400,000,000 (SCI Market Cap Threshold) were included.

For companies whose listing date on the Irish Stock Exchange is later than January 4th 1999, inclusion in the ISEQ® Small Cap Index depends on it meeting the following criteria:

Companies must be eligible for inclusion in ISEQ® Overall Index
Companies which are included in the ISEQ®20 Index are excluded
Companies must have a market capitalisation of less than or equal to the current SCI Market Cap Threshold

If a company de-lists or is removed from the ISEQ® Overall Index, then that company will be removed from the ISEQ® Small Cap Index.

If a company enters into the ISEQ®20 Index then it will be removed from the ISEQ® Small Cap Index upon the next ISEQ® Small Cap Index Constituent Review.

Ongoing ISEQ® Small Cap Index Constituent Review:
The ISE reviews the constituents on a quarterly basis in March, June, September and December each year to ensure their continuing suitability for inclusion in the ISEQ® Small Cap Index.

The review ascertains whether a company’s freefloat market capitalisation is within the current SCI Market Cap Threshold.

This review is made of all ISEQ® Overall Index constituents which are not included in the ISEQ®20 Index.

ISEQ® Small Cap Index Market Cap Threshold re-evaluation:
The ISE reviews the SCI Market Cap Threshold at each ISEQ® Small Cap Index Constituent Review to ensure that it is representative of the smaller companies quoted on the Irish Stock Exchange.

ISEQ® Small Cap Index Base Date and Value:
The ISEQ® Small Cap Index is based at 1,000 on January 4 1999. Publication of the ISEQ® Small Cap Index began on December 1st, 1999.