Bloomberg LP | Best Index Provider – Fixed Income ETFs | Best Index Provider – Commodity ETFs
Commenting on this year’s volatility, particularly in fixed income, Bloomberg’s Dave Gedeon, Head of Product at Bloomberg Index Services Limited (BISL), jokes: “Who doesn’t love a 15-16 per cent drop that hasn’t happened before?”
He adds: “But it is the market and our job is to be focused on the delivery of world class indices to provide active managers with benchmarks that they can beat, or on the passive side, track, in any market environment.
“Any time where there is significant market volatility the index shines and demonstrates the value and capabilities that come from the indexing side.”
Gedeon notes that changes in the yield curve give rise to new opportunities across indices. “Suddenly short duration is compelling,” he says. “Crypto firms are buying treasuries for their stable coins because the yields are interesting.”
Bloomberg has focused on targeting maturity or creating duration bands across their indices, enabling people to take advantage of the market shifts.
“The ETF vehicle is the driver that allows people to take up a rules-based methodology to represent their views,” he says.
“There have been huge shifts into the shorter end of the curve to safety, with treasuries and Bloomberg is the pre-eminent provider of fixed income indices.”
Gedeon comments that market volatility is not fun when you are used to seeing stability. “When you see a tough year-to-date chart with almost 17 per cent negative, that is not expected. However, the positive view is that the entirety of the ETF eco-system really shines when these types of events happen. 2008 saw the growth of passive investing and this is a catalyst moment for fixed income as well where the world changed really fast.”
The commodities market has also proved interesting for Gedeon and Bloomberg Indices, with volatility that no one has seen before, which is fundamentally different from the build-up to 2007/8.
“If you zoom out, commodities provide a compelling alternative to cryptocurrencies and to bonds, and where commodities have had the opportunity to shine is as inflation has appeared.”
Despite a lack of performance prior to the last two to three years, commodities have worked within a multi-asset portfolio, Gedeon says. “They take on the role of bearer of diversification.”
Bloomberg provides the leading benchmark in commodities, the Bloomberg Commodity Index (BCOM). “We want to be at the centre of that space, focused on the quality and delivery of our benchmarks, and we want to be the preferred provider across the entire ETF eco-system,” he says.
“Bloomberg is extremely focused on the indexing side for providing solutions. We sit within the broader investment eco system as a large data provider and we believe in providing information – in my case its index information and where we can provide value for our clients and move the broader eco system forward is to be focused on innovation.”