The Index Industry Association (IIA), a global organisation of index administrators, has surveyed its 14 member firms in an effort to assess the total number of indexes available globally for the first time ever.
According to the survey, there are 3.288 million indexes globally with equity indexes representing over 95 per cent of benchmarks calculated.
The survey, which was conducted as of June 30, 2017, sought information only about the total number of indexes administered by each IIA member. It is estimated that these indexes represent approximately 98 per cent of all indexes globally available.
Rick Redding, the CEO of IIA, says: “This is the first time anyone has attempted to quantify the complete index universe and the results are enlightening. Oftentimes the discussion revolves around products, but with approximately 5,300 exchange-traded funds worldwide, the results show that benchmarking is clearly the predominant use for indexes around the world. With over three million indexes available, asset managers and investors want choices when choosing a benchmark that best represents their portfolio and the underlying market.”
According to the survey, global indexes represent approximately 29 per cent of the equity indexes available by geography. This is followed by APAC and EMEA, which each represent approximately 24 per cent of equity indexes available, and frontier/emerging indexes (14 per cent). The Americas have the fewest number of equity indexes, representing 9 percent of indexes globally.
However, when looking at fixed income indexes by geography, the Americas represent approximately 33 per cent of total indexes available. This is followed by EMEA (29 per cent), global (25 per cent), APAC (14 per cent) and frontier/emerging (0.5 per cent).
“The geographical breakdown of equity indexes may initially come as a surprise, but when you think about the number of industries and sectors in each country across the globe, it makes sense that Europe and Asia have a larger share of the index landscape,” Redding says. “On the flip side, fixed income results favour the Americas because issues like market structure, taxable status, and size of the securitization market have created much more demand for indexes in sovereign, composite, high yield, and securitization. What I found interesting was despite recent attention on ESG and Smart beta indexes, they only represent less than six percent of the overall market combined. There is much more interest in traditional market cap indexes and our results show that industry and sector-specific indexes are the most common.”
A complete geographical breakdown by region and asset class is available on the following page. The other most common indexes, by asset class administered by IIA members, are based on commodities, foreign exchange and healthcare costs and collectively are less than one percent of all indexes. As mentioned, this is the inaugural analysis and the results will be updated annually. The amount of assets under management benchmarked to these indexes was not in the scope of this project as independent index administrators do not have complete access to this data.
IIA was founded as the first-ever trade association for the index industry, and is continuing its expansion to serve the global investor community. Created as a not-for-profit organisation for the fast-growing community of index providers, the IIA membership is open to independent index administrators worldwide.
All IIA members separately submitted this information to the IIA and the IIA has not shared it among the members other than in the aggregate form made available to the public.