For the fourth year running, the Index Industry Association (IIA), a trade organization for independent index providers, has quantified the global index universe, compiling data from its 16 member firms, including FTSE Russell. The IIA’s latest benchmark survey reveals interesting new developments in the global index landscape. With 2020 experiencing record levels of investor uncertainty and market volatility, the number of indexes has grown by about 3% since 2019 to a total of 3.05 million. The report also notes a significant increase in the number of Environmental, Social and Governance (ESG) indexes as well as a rise in fixed income indexes.
This year’s report found an increase of 40.2% in the number of ESG indexes, a figure that has trended upward since the very first survey was conducted in 2016, reflecting investors’ surging interest in sustainable investment. A 2020 survey by FTSE Russell found that more than 7 in 10 asset owners globally are evaluating and implementing sustainable investment considerations in their investment strategies and among those using and/or evaluating smart beta strategies, 58% anticipate applying sustainable investment considerations to their smart beta strategy, up from 44% in 2019.
Chart: 2020 Equities Indices Share by Market Segment
On the fixed income front, the IIA revealed that the number of indexes measuring global bond markets rose by 7.1% in the past year, and nearly 15% in the past two years. There was notable growth across the full range of fixed income index subcategories, with a notable uptick in ESG.
Chart: 2020 Fixed Income Indices Share by Market Segment
Arne Staal – global head of research and product management, Information Services Division, London Stock Exchange Group:
"As a member of the Index Industry Association, FTSE Russell supports the organization’s mission to educate investors about the important role of independent indexes in the financial ecosystem, and the annual survey is key in identifying areas of growth and innovation. The IIA has been tracking the global index landscape since late 2016 and interesting trends have begun to emerge, particularly in the ESG space. The survey underscores the notable trend of index providers expanding their capabilities across additional asset classes and investment themes to respond to growing demand from market participants for investment transparency and tools."
Rick Redding – chief executive officer, Index Industry Association:
"The survey’s 2020 results demonstrate a highly competitive industry that continues to broaden its offerings to meet investor demand. Indices today are transparent and reliable representations of market segments covering a wide spectrum of asset classes and investment themes, and an integral piece of the global investor’s toolkit."
FTSE Russell is a member of the Index Industry Association (IIA), an independent, not-for-profit organization based in New York that provides a voice for the global index industry. Founded in March 2012, the association is the first ever index industry trade body and is committed to representing the global index industry by working with market participants, regulators and other representative bodies to promote competition and sound practices in the index industry to strengthen markets and serve the needs of investors. Please visit the IIA website to learn more.
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