By Hillary Keitel - Head of US Wealth, Information Services Division, London Stock Exchange Group
I believe the famous Burger King ad slogan, “Have it Your Way,” is very well understood across all consumer cultures because it so precisely expresses the experience all customers—regardless of the industry—desire. This standard for client experience has even crept into areas in market data once considered so complex that providers were limited in their ability to customize products and services to clients’ needs.
First, consider how market data can be packaged. FTSE Russell, along with our partners, has always strived to let our customers have data their way with a variety of index approaches, but our ability to customize market indexes is now greater than ever. Look no further than our recent introduction of the first climate risk-adjusted version of our well followed FTSE World Government Bond Index (WGBI) as a prime example. Advancements in index methodology and supporting technology have enabled us to now provide an index which weights sovereign bonds based on the readiness of their respective governments to address global climate standards.
Second, consider how market data is delivered to investors by our partners. Direct indexing now allows our wealth management and financial advisor clients to use our market indexes as a means to invest directly in a customized basket of securities to potentially deliver unique tax benefits to their individual investor clients. Also, through advances in technology on the part of our clients in the services they deliver to their customers, Direct indexing also allows for fractional share trading, which can lead to investor benefits such as lower account minimums, minimal tracking error and easier portfolio deposits, withdrawals and rebalancing. Direct Indexing far exceeds the level of customization previously possible through index-based investment approaches such as mutual funds and ETFs. See our chart on the evolution of index-based investing.
As a global index provider, FTSE Russell is agnostic to the approach the investor takes as long as they have the best possible resources to take it. We are focused on providing the highest quality market data and indexes to help our clients achieve their investment objectives. We construct transparent, representative, and replicable indexes based on a range of investment requirements such as liquidity, tracking error, portfolio turnover, and risk budget. Our clients can then deliver these market indexes to their clients in a variety of ways through a range of index-based investment approaches, from mutual funds, to ETFs and now Direct Indexing. The good news for our clients is that now, more than ever, investors can "have it their way" when it comes to market indexes and index-based investment approaches based on them.
FTSE Russell is more than happy to play a part in this evolution.
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