NEW YORK, Nov. 23, 2010 (GLOBE NEWSWIRE) -- Dow Jones Indexes, a leading global index provider and a CME Group company, today announced the latest performance data for the Dow Jones U.S. Venture Capital Index. The index is designed to measure changes in the market value of venture capital-financed companies in the United States.
At the end of the second quarter 2010, the index value was 1,183.21,(1) down 18.29% from December 31, 2009. According to Sand Hill Econometrics, which co-developed the index's methodology, there were two factors behind the decline. One is several "disappointing exits" -- companies that failed or were acquired for low values. The other is the general decline in equity values during the quarter -- the Dow Jones U.S. Total Stock Market Index fell 11.52% during the second quarter of 2010. As Sand Hill notes, VC is not immune to a drop in equity values and the stock market is an indicator of equity values overall.
"We are pleased to present the latest index performance results," said Susan Woodward, an economist and the founder of Sand Hill Econometrics. "Year-to-date we have a drop in values, with most of that decline in the second quarter. However, venture values are up 57% from the trough in February 2009, confirming that venture capital is here to stay," noted Woodward.
The methodology for the Dow Jones U.S. Venture Capital Index was developed by Sand Hill Econometrics together with Dow Jones Indexes. The values are based on a combination of values reported to Dow Jones VentureSource and value estimates. Sand Hill previously developed econometric methods for estimating company values when a recent market value is not readily available. Dow Jones VentureSource database is owned by Dow Jones & Company, Inc.
The selection universe for the Dow Jones U.S. Venture Capital Index is based on companies in the Dow Jones VentureSource database, the world's most comprehensive venture capital database which tracks more than 14,000 private investment firms and more than 48,000 venture-backed companies in all industries and stages of development, worldwide.
The index tracks the value of companies headquartered in the United States that have received equity funding from institutional venture capital funds. Excluded from the index are companies that receive funding solely from "angels," affluent private investors, or leveraged buyout funds. Component companies enter the index when they get a first round of venture funding. They are removed from the index when they are acquired; merge with another company; make an initial public offering (IPO), or go out of business. The index is market-value weighted and is reviewed quarterly.
As of June 30, 2010, there were approximately 7,500 components in the Dow Jones U.S. Venture Capital Index. The Dow Jones Venture Capital Index was first published on March 31, 2010. The back-tested data shows that the index has an annualized performance of 14.28% since the end of 1991, before expenses and fees. Estimated monthly back-tested history is available back to December 31, 1991.(2)
The Dow Jones U.S. Venture Capital Index is calculated in U.S. dollars and is published quarterly, as funding events are usually reported at the end of calendar quarters, on a one-quarter delayed basis. Index values for intervening months also will be published quarterly. Index values for July, August and September of this year will be published in February 2011.
The Dow Jones U.S. Venture Capital Index has been licensed to Chicago Alternative Investment Partners, LLC to serve as a basis for financial products.
For more information on the Dow Jones U.S. Venture Capital Index, please visit www.djindexes.com.
1The Dow Jones U.S. Venture Capital Index values have been revised from previous published values. These are normal, ongoing revisions that occur when previously unreported transactions become known.
2The Dow Jones U.S. Venture Capital Index was first published on March 31, 2010. All estimated daily historical closing prices prior to that date are based on back-testing (i.e., calculations of how the index might have performed in the past if it had existed). Back tested performance information is purely hypothetical and is solely for informational purposes. Back tested performance does not represent actual performance, and past performance is not indicative of future results.
Journalists may e-mail questions regarding this press release to media@djindexes.com.
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About Dow Jones Indexes
Dow Jones Indexes (www.djindexes.com) is a leading full-service index provider that develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best-known for the Dow Jones Industrial Average, Dow Jones Indexes offers more than 130,000 equity indexes as well as fixed-income and alternative indexes, including measures of hedge funds, commodities and real estate. Dow Jones Indexes employs clear, unbiased and systematic methodologies that are fully integrated within index families. Dow Jones Indexes is part of a joint venture company owned 90 percent by CME Group Inc. (www.cmegroup.com) and 10 percent by Dow Jones & Company, Inc. (www.dowjones.com), a News Corporation company (Nasdaq:NWS) (Nasdaq:NWSA) (ASX:NWS) (ASX:NWSLV) (www.newscorp.com).
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"Dow Jones®", "Dow Jones Indexes" and "Dow Jones Venture Capital Indexes" are service marks of Dow Jones Trademark Holdings LLC ("Dow Jones"), and have been licensed for use by CME Group Index Services LLC ("CME Indexes"). Investment products based on the Dow Jones Venture Capital Indexes are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes or their respective affiliates and none of Dow Jones, CME Indexes and their respective affiliates make any representation regarding the advisability of investing in such products. Inclusion of a company in any of the Dow Jones Venture Capital Indexes does not in any way reflect an opinion of Dow Jones, CME Indexes or any of their respective affiliates on the investment merits of such company. None of Dow Jones, CME Indexes or any of their respective affiliates is providing investment advice in connection with these indexes.