Stockholm (NordSIP) – According to the Index Industry Association’s (IIA) fourth Annual Benchmark Survey, ESG indices were one of the main drivers of growth in the index market witnessing a 40.2% growth during 2019-2020. This level of expansion is the highest on record according to the IIA, and was more than twice as much as witnessed in the previous year (13.9%)
IIA is an independent, non-profit organization based in New York that provides a voice for the global index industry. Founded in March 2012, the association represents the global index industry by working with market participants, regulators and other representative bodies to promote competition and sound practices in the index industry.
“The survey’s 2020 results demonstrate a highly competitive industry that continues to broaden its offerings to meet investor demand,” Rick Redding, the CEO of IIA, commented. “Indices today are transparent and reliable representations of market segments covering a wide spectrum of asset classes and investment themes, and an integral piece of the global investor’s toolkit.”
Even in the second fastest growing category of indices, fixed income (up by 7.1%), sustainability factors were an important contribution to growth. “Delving deeper, growth in fixed income was demonstrated across the full range of index subcategories, whereas equities growth was primarily concentrated in industry/sector, thematic, and ESG-related products,” Redding added
However, there is room to grow. Despite the record-breaking pace of growth of ESG indices, their total share of the market remains very small. Among equities, and grouped together with other factor, and thematic indices, ESG benchmarks only represent 6.8% of the market, the smallest share among all of the IIA’s categories. Among fixed income, the share is even smaller, standing only at 1% of the total.
The membership of the IIA includes the world’s leading index providers, such as Bloomberg Indices, Cboe Global Markets, Chicago Booth Center for Research in Security Prices (CRSP), China Central Depository and Clearing, FTSE Russell, Hang Seng Indexes, ICE Data Services, IHS Markit, Morningstar Indexes, MSCI Inc., Nasdaq Global Indexes, Shenzhen Securities Information Co., Ltd., S&P/Dow Jones Indices, Tokyo Stock Exchange and Qontigo (formerly STOXX).