--- title: "NGX Pension Index: Methodology" description: "NGX Pension Index is maintained by Nigerian Exchange and covers companies meeting pension fund investment guidelines listed on the Nigerian Exchange." canonical: https://www.getswoopr.com/stocks/indexes/ngx-pension/ source: "Swoopr Investment: https://www.getswoopr.com" --- # NGX Pension Index: What It Measures and How It Is Built ## Direct Answer > The NGX Pension Index is a rule-based measurement of companies meeting pension fund investment guidelines listed on the Nigerian Exchange, maintained by Nigerian Exchange. Like every index it owns nothing: it is a number produced by applying a published weighting formula to a selected list of companies, revised on a schedule the provider sets. ## What this index covers The NGX Pension Index covers companies meeting pension fund investment guidelines listed on the Nigerian Exchange, within the Nigeria market. Nigerian Exchange defines which securities are eligible, how they are selected from that pool, and how much each one contributes to the published number. The index name does not state a fixed company count, so the number of constituents follows the eligibility rules rather than a target. ## How constituents are weighted A total return index weighted by adjusted market capitalization: listed shares multiplied by closing price and a capping factor, then adjusted for the free float factor. In line with the pension reform guideline, no individual listed equity can have a weighting above 4.5%, and no sector more than 45% or less than 2%. The weighting method is the single biggest driver of how an index behaves. Two indexes covering the same market can diverge for years purely because they weight differently, which is why comparing index levels without knowing the method tells you very little. ## What qualifies for inclusion The number of stocks is fixed at 40, taken as the top companies by market capitalisation and liquidity from the most liquid sectors. Only fully paid common shares in Nigerian currency are included. Companies need a free float factor of at least 5% and must have paid a dividend or bonus at least once in the last five years. Eligibility rules are the part of an index most readers never look at and the part that decides what it can possibly measure. A screen that excludes a whole sector, or admits only one listing venue, shapes the result far more than any day of trading does. ## When the membership is revised The index is reviewed annually on the first business day in January, when constituents are added or deleted based on market capitalization, liquidity in the previous twelve months and the free float factor. Total return values are available only at end of day, with no intra-day values. Reconstitution is the one date an index changes shape by design rather than by price. Funds tracking it have to trade toward the new membership, which is why the schedule matters to anyone holding the tracker rather than only to the provider. ## The rule that surprises people Normal dividends are reinvested and accounted for in the total return through a divisor adjustment, and special dividends from non-operating income also require divisor adjustments. The document gives a base of 1000 at 31 December 2012, with values available from 2 January 2013. ## References - [Nigerian Exchange: Nigerian Exchange, FAQs: NSE Pension Index](https://doclib.ngxgroup.com/investors-site/becoming-an-investor/FAQs/NSE%20Pension%20Index.pdf), which carries no publication date. Every rule described on this page is taken from this document. ## Current NGX Pension Index constituents Nigerian Exchange publishes and licenses the NGX Pension Index constituent list. Swoopr does not republish it here. The provider's own page is the authoritative source for current membership and weights. [Nigerian Exchange: official NGX Pension Index page](https://www.amf.org.ae/en/amf_indices/yearly) ## Related reading - [All stock market indexes](https://www.getswoopr.com/stocks/indexes/): how indexes are built, weighted and revised. - [Emerging Markets indexes](https://www.getswoopr.com/stocks/indexes/emerging-markets/): others covering the same region. - [Index concentration](https://www.getswoopr.com/technical-analysis/market-concentration/index-concentration/): measuring how much of an index sits in its largest holdings. - [Index rebalancing and inclusion effects](https://www.getswoopr.com/stocks/corporate-actions-catalysts/index-rebalancing-and-inclusion-effects/): what happens to a stock when index membership changes. ## Frequently Asked Questions ### Who maintains the NGX Pension Index? Nigerian Exchange maintains the NGX Pension Index and publishes the methodology document that defines its eligibility and weighting rules. ### What does the NGX Pension Index measure? It measures companies meeting pension fund investment guidelines listed on the Nigerian Exchange. The index is a calculated number applying a weighting formula to a selected list of companies, and it holds nothing itself. ### Where can I see the current NGX Pension Index constituents? Nigerian Exchange publishes the current constituent list. Swoopr does not republish it, because index providers license constituent data and Swoopr holds no such licence. ## About the author The [Swoopr Editorial Team](https://www.getswoopr.com/authors/swoopr-editorial-team/) writes Swoopr Investment's educational library, covering market structure, analysis methods and the mechanics behind the numbers investors read every day. Our [editorial policy](https://www.getswoopr.com/legal/editorial-policy/) and [corrections policy](https://www.getswoopr.com/legal/corrections-policy/) set out how this content is produced, reviewed and fixed when it is wrong.