STOXX Ltd is a global index provider, currently calculating a global index family of over 7,000 rules-based and transparent indices. STOXX indices are licensed to more than 500 companies globally. Three of Europe’s top ETFs and 30 per cent of all European ETF AUM are based on STOXX indices.
Last year there were myriad developments as STOXX Ltd continues to cement its place as one of the world’s foremost pioneers in index creation. On the licensing front there were numerous announcements in support of ETF providers in the US and Asia.
Last October, for example, STOXX announced that the STOXX Europe 600 Index had been licensed to ALPS, a leading US Investment Manager, to serve as the basis for a new ETF – the ALPS STOXX Europe 600 ETF. This was the first time that the STOXX Europe 600 had been licensed to underlie an ETF in the United States. Currently, 10 ETPs are available on the index globally.
Last June, STOXX further developed its footprint in Asia by announcing the licensing of two STOXX Minimum Variance indices to Resona Bank to be used in passive funds by Japanese pension funds. The indices use Harry M Markowitz’s Nobel Prize-winning Modern Portfolio Theory to create a hypothetical, risk-optimised portfolio based on a variety of STOXX indices.
The objective of the indices is to provide access to the respective markets by varying the weights of the stocks of the underlying broad indices in such a way that the overall portfolio of the minimum variance index has the lowest possible volatility.
Also last year, EURO STOXX 50 Hedged JPY Index was licensed to Nomura Asset Management and EURO STOXX Small Index was licensed to State Street Global Advisors.
To illustrate the extent of innovation when it comes to index creation, last September the firm rolled out the STOXX Global 3D Printing Tradable Daily Short Index. The index was licensed to HypoVereinsbank onemarkets (UniCredit Bank AG) to serve as the basis of an index certificate. This Index replicates a short investment strategy that is inversely linked to the daily performance of the STOXX Global 3D Printing Tradable Index: i.e. a negative performance of the underlying index result in a positive performance of the Index.
The underlying STOXX Global 3D Printing Tradable Index comprises companies out of the STOXX Global Total Market Index that generate more than one per cent of their revenues from the 3D printing sector.
“The STOXX Global 3D Printing index family is a recent and appropriate example that showcases our innovation,” says Hartmut Graf (pictured), CEO of STOXX. “The short index allows sophisticated market participants to make tactical investments during bearish markets. And the long index offers market participants an innovative and strictly rules-based tool to participate from the performance of this booming sector.”
This year has been a positive start at STOXX Ltd. In February, an important addition to its smart beta offering was announced with the arrival of the STOXX Sharpe Ratio indices; a first-in-kind family of indices. The indices include stocks from the respective benchmarks that have the highest Sharpe ratios, excluding those with low dividend yields and low liquidity.
JP Morgan has licensed the STOXX Europe Sharpe Ratio 50 Index, based on the STOXX Europe 600 Index whereby those 50 companies with the highest one-year Sharpe ratios are included in the index, for a structured product.