Standard & Poor's to give style indexes an extreme makeover

Standard & Poor’s will introduce new factors for its U.S. style indexes during the fourth quarter of this year, the company revealed today. Its next generation of growth/value style and pure style indexes will be based on a review and analysis of 10 years of recent academic literature. “In order to effectively capture changes in financial theory, accounting standards and investment sentiment, a relevant and efficient style benchmark should refresh its factors every five to 10 years,” Aniket Ullal, senior director at S&P Index Services, said in a statement. “The introduction of new factors such as momentum to calculate the S&P Style and S&P Pure Style indices will reflect the new way that investors think about style.” The next generation of style indexes from Standard & Poor’s will continue to be based upon its existing methodology structure but will use six factors to determine stock level style scores, rather than the seven used previously. The factors used to determine growth and value will also be refreshed.