Capital Markets Index
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The Capital Markets Index (CPMKTSsm) [1]is an investment tool that tracks the value of traditional investment-grade U.S. capital market securities. CPMKTS is a real-time, market-weighted index. It includes approximately 9,500 equity, fixed income and money market instruments.
CPMKTS index was launched by Dorchester Capital Management Company of Houston, Texas on May 4, 2006. The Capital Markets Index is carried on The American Stock Exchange [2] under the symbol CPMKTS with updates every 15 seconds.
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[edit] Product Details
CPMKTS measures the capital markets on a consolidated basis. Rather than further subdivide the market as other indexes do, CPMKTS views the capital markets on a broader basis and therefore includes stocks, bonds and money market instruments. It satisfies the needs of both professional and lay investors for a measurement tool for mixed or blended portfolios and provides the basis for a wide variety of investment instruments.
Other indexes within the CPMKTS family measure sub-segments of the market.
The Amex also publishes sub-indexes CPMKTE, CPMKTB and CPMKTL, tracking equities, bonds and liquidity, respectively.
The CPMKTS and its family of indexes were created to meet the market's need for:
- More sophisticated measures of capital market performance
- Improved measures of risk and return
- Better tools to make asset-allocation and investment decisions
Highlights of the CPMKTS index include:
- Comprises stocks, bonds, and money market instruments from the US investment grade capital markets.
- Component fixed income securities and money market instruments are revised monthly. Component equity securities are revised quarterly. All weightings are revised monthly.
- Completely transparent rules-based selection criteria.
- Has documented demand from investment professionals and individual investors as benchmark tool and as a basis for investment product basis, as documented by Harris Interactive/Quest Business Agency Market Research
- Delivers capital market return for capital market risk
- Replicates the capital markets' actual asset allocation
- No known competitors in measuring the broader capital markets' performance
- Back-tested to December 1979 using the same methodology employed for ongoing revisions and calculations.
[edit] How it works
Dorchester [www.cpmkts.com] has collected over 30 years of historical data—including government statistics and market changes—which now are stored in the company's computers (two systems in Houston and a redundant system in Chicago). Each day 200 million pieces of information are added.
The data is organized, processed and updated every 15 seconds. This statistical selection removes the subjectivity associated with other indexes. It accurately represents the history, mix and behavior of the capital markets.
How the index is calculated
- Real-time and historical data have been acquired from multiple financial and government sources.
- Data is organized, normalized and processed.
- Dorchester's CPMKTIG is formulated, using all the investment-grade capital market assets and allocations.
- CPMKTS is the real-time index representation of the entire investment-grade U.S. capital market as derived from CPMKTIG and calculated by Dorchester and the AMEX.
- The AMEX publishes CPMKTS and its component indexes on the "tape" every 15 seconds.
[edit] Company History
In the mid-1970s, while attending graduate school at the University of Chicago, Warren Schmalenberger, current President and CEO of [Dorchestor Capital Management Company] asked himself why no index had ever been devised that would measure the overall value of the U.S. capital markets.
Equity indices—as exemplified by the well-known Dow Jones and Standard & Poor's indices—were immediately recognizable. Yet no one was tracking bonds or money market investments - much less the total value of U.S. capital markets.
As Mr. Schmalenberger considered this possibility, he became convinced that a capital markets index would have value not only among the professional investment community, but also among individual investors.
In the ensuing years, Mr. Schmalenberger gave additional thought to the idea, even as he was building a career in the financial-services industry. Several new indexes were developed and launched during this period, and creative variations such as exchange-traded funds (ETFs) and index mutual fund gained huge popularity among investors. However, a capital markets index was not among those developed.
In 1995, Mr. Schmalenberger founded [Dorchester Capital Management Co.] in Houston. By that time, bond indexes were firmly established within the fixed-income markets, but there was still no index tracking liquidity, the total value of the U.S. capital markets or the asset allocation among equities, bonds and money market instruments.
He continued to believe that a capital markets index made sense—both intellectually and from a commercial standpoint. He also believed—and subsequent research would validate his conviction—that there would be strong market demand for a more-sophisticated measure of the performance of the entire capital market, an improved measure of risk-reward ratios, and better tools with which to make asset-allocation and investment decisions.
The process of building the Capital Markets Index, known as CPMKTS, thus was under way.
[edit] Executives
Warren Schmalenberger — Founder and CEO Warren F. Schmalenberger is the founder and chief executive officer of Dorchester Capital Management Company. Mr. Schmalenberger is responsible for the company's strategic direction, as well as product development. Prior to founding Dorchester, Mr. Schmalenberger was a managing director at Transamerica Fund Management Company, where in addition to his product development, communications and marketing responsibilities, he directed all fixed income investments. Previously, he served as vice chairman of the asset-liability committee at a savings and loan association, where he oversaw investment, finance and liquidity strategies and implementation.
Earlier in his career, he worked at Bank of America in the bank investment securities division. During this period, he designed and built the first database of daily commercial financial statistics, which is currently in use by hundreds of institutions worldwide, and authored a weekly economic and bond market newsletter. He later served as a member of the team that managed the bank's multibillion-dollar portfolio of U.S. Treasury, federal agency, mortgage-backed and municipal securities, and was a member of the bank's interest rate committee.
Mr. Schmalenberger received a bachelor's degree from St. Johns College, "Great Books Program," and earned his MBA while studying with individuals who would later become Nobel Prize Laureates at The University of Chicago.
Paul Stockton Paul E. Stockton is responsible primarily for Sales and Marketing and serves on the company's Advisory Board. Mr. Stockton has broad and diverse experience spanning research, marketing, sales, general management and consulting for global market leaders.
Alan D. Vera, CDC Alan D. Vera is a noted marketing communications expert who has pioneered the application of consumer product marketing techniques to the marketing of a broad spectrum of industrial, financial, technical and professional products and services. Mr. Vera advises Dorchester on the development and implementation of both short- and long-term marketing and sales strategies to further the company's business goals.
Jean McFadden Jean McFadden has over 15 years experience in product and project management in the financial services industry focused on development and marketing of mutual funds, tax-deferred products for retirement and college saving and ETFs. Her responsibilities with Dorchester include researching new investment product opportunities, assisting with launch coordination, and providing training for investment products based on Dorchester indexes.
Brandon Wallace Brandon Wallace has over 15 years experience developing financial analytics software. His areas of expertise include fixed income analytics, portfolio management tools, database design, data gathering, and accounting. Brandon’s responsibilities with Dorchester include designing and implementing the index equity and fixed income analytics, the securities database, and the automated systems which acquire, standardize, and merge the data from our various financial data providers.
Matthew Lott Matthew Lott has over a decade of computer development experience, the last six years in the financial sector. His areas of expertise include developing software for portfolio management, trade management, and fixed income and money market analytics. Matthew’s primary area of responsibility with Dorchester was the development of the application to calculate the CPMKTL and CPMKTB real-time Liquidity and Bond indexes.
Joshua J. Perryman Josh Perryman has over a decade in technology management and software development experience. His areas of expertise include technology security, systems maintenance & monitoring, and operational procedure development. Josh’s primary areas of responsibility with Dorchester have been systems management and the implementation of the index constituent selection process.
[edit] References
[http://www.cpmkts.com/aboutus.php Dorchester and CPMKTS: Developing an Improved Risk-Reward Measure and Better Asset-Allocation Tool]. The Capital Markets Index. Retrieved on 2006-06-04.
TSURUOKA, Doug. "New Index Aiming For Big Picture; Capital Markets Index; Dorchester says it's the first such view of value of all the capital markets", Investors Business Daily, 23 May 2006.
CPMKTS, The Capital Markets Index, Launches as First Measure of Aggregate U.S. Market Performance. The Capital Markets Index.
Hoffman, David. "Index to reflect 'the market in aggregate'", Investment News, 8 May 2006.
Quest Business Agency, Inc, Dorchester Benchmark Research. "Dorchester Capital Management: Benchmark Research Results--Investment Professionals", Harris Interactive.
