Dow Jones announced the launch of their 130/30 Index last week, putting the firm in competition with Credit Suisse and S&P for the attention of 130/30 investors.

Like CS (see related posting) and S&P (see related posting), Dow Jones simply executes a pre-existing security-selection methodology in a 130/30 format.  The security-ranking methodology is called “RBPP” (”required business performance probability”) and it measures companies according to the likelihood that management will meet the business expectations implied by recent stock prices.

In fact, the index is simply a combination of three existing indices. Says the index methodology overview:

“The Dow Jones RBP U.S. Large-Cap 130/30 Index is created by combining the core 750 securities with a component that measures an additional 30% long position in the Dow Jones RBP U.S. Large-Cap Leading 30 Index through a 30% inverse exposure to the Dow Jones RBP U.S. Large-Cap Lagging 30 Index.”

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