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ESG dominates indices says sixth annual Index Industry Association Benchmark Survey  

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The Index Industry Association (IIA), the industry trade group for the global independent index provider community, has announced the results of its sixth annual global benchmark survey, revealing that the number of indexes globally increased 4.43 per cent in the last year, led again by ESG indexes which grew to new records.

Rick Redding, IIA’s CEO, says: “The index industry continues to meet the needs of the marketplace by creating innovative solutions. Highlighted again this year by record growth in ESG, index providers are empowering investors with the ability to define, track and better understand an ever-broadening range of financial markets, sectors, investment styles and asset classes. The results also reveal index providers are diversifying into additional asset classes and increasing competition in every major category.”

Although overall growth for 2022 (4.43 per cent) slightly trailed 2021’s pace of nearly 5 per cent for the industry, the number of ESG indexes globally grew 55 per cent and surpassed 50,000 worldwide across asset classes for the first time.

The convergence of two major trends over the last three years – the rapid increase in ESG and fixed income indexes – resulted in the number of ESG fixed income indexes increasing by a record 95.8 per cent, smashing the previous record of 61.09 per cent in 2021. Equity ESG indexes grew at a slower, but extremely rapid rate of 24.15 per cent, and for the first time were outnumbered by fixed income ESG indexes. Global fixed income ESG growth was the fastest at 122.5 per cent with EMEA following at 92.5 per cent growth from the previous survey.

Overall fixed income indexes increased 4.52 per cent, slightly outpacing equities which increased 4.29 per cent. Muni indexes enjoyed the strongest year for non-ESG fixed income, growing 10.86 per cent while the distribution across other categories remained stable led by Sovereign, Composite and Corporate Bond Indexes.

While the Americas market has more fixed income indexes than other regions, the distribution of indexes across all regions remained stable and consistent with recent years. This is in contrast to equity indexes, the IIA writes, where the Americas have the fewest indexes globally. The Americas have a much larger number of securitisation, high yield and municipal bond indexes compared to the other regions.

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