FTSE Russell To Launch Fixed Income ESG Data
Waqas Samad, chief executive benchmarks at FTSE Russell, said the index, data and analytics provider owned by the London Stock Exchange Group will launch new data products for fixed income environmental, social and governance strategies in the foreseeable future.
Samad told Markets Media that there is a wave in interest in ESG from investors, so they require more data.
“In every client interaction the conversation usually turns very quickly to ESG in both equities and fixed income,” he added. “We will be coming to the market in foreseeable future with new fixed income data, so watch this space.”
In order to develop more ESG indices, FTSE Russell entered a strategic partnership last year with Sustainalytics, a provider of ESG and corporate governance research, ratings and analysis.
The responsible investment market grew to more than $30 (€26) trillion last year from $23 trillion in assets under management in 2016 according to a report from Opimas. The consultancy has predicted that the market will grow to $35 trillion by 2020 in the study, ESG Data: Mainstream Consumption, Bigger Spending.
Axel Pierron, managing director at Opimas, said in the report: “The mainstreaming of ESG data means that it is becoming standard market data.”
Spending in the ESG data market, including ESG content and indices, is rapidly growing. Total spending was $505 million in 2018 and is expected to hit $745 million by 2020. The mainstreaming of ESG data means that it is becoming standard market data. https://t.co/KEc4r3Tcv9 pic.twitter.com/HHX7laiOre
— Opimas LLC (@OpimasLLC) January 11, 2019
Pierron continued that global spending on ESG indices was $130m last year and with an annual growth rate of 37%, is likely to reach $240m by 2020. As a result the number of ESG data providers is growing and stands at about 150, although it is dominated by fewer than 20 players.
“Each has its own methodologies, data sources, and sets of criteria to rank and score companies’ extra-financial performance,” added Pierron. “While all of these data vendors are providing research data to determine ESG ratings or scores, only some of them are providing ESG indices. Among the latter, FTSE Russell is the only index “pure player’.”
The London Stock Exchange Group acquired analytics provider The Yield Book and Citi Fixed Income Indices from Citigroup in 2017 in order to boost FTSE Russell’s fixed income capabilities.
Samad said: “We took a huge step forward with the 2017 acquisition. We now provide headline indices in both equities and fixed income which are followed by $16 trillion in assets under management.”
The purchase included the widely followed World Government Bond Index as well as a family of global indices which cover a range of asset classes including high-yield, emerging markets and securitisations. He continued that FTSE Russell aims to provide indices, analytics and reference data globally across both equities and fixed income.
“Our clients include the largest global asset managers and asset owners and very few data providers can provide them with complete coverage,” Samas added. “We are at the forefront of the multi-asset space.”
In order to meet increasing client demand for multi-asset data, FTSE Russell yesterday announced an extension of its existing fixed income relationship with Refinitiv, formerly the financial and risk business of Thomson Reuters.
Stuart Martin, managing director, partnerships proposition at Refinitiv, told Markets Markets that the company has a long-standing complementary relationship with both FTSE Russell and Citi.
“Clients are aggressively hunting for new data so there is a significant opportunity to innovate,” said Martin.
He agreed that clients are increasingly looking for ESG and multi-asset data. Martin continued that Refinitiv is also going to expand the data it provides to the buy side
“We are also looking at new technology and moving to the cloud,” he added. “We have already been working with FTSE Russell on new delivery mechanisms.”
Investors want greater transparency across all asset classes and portfolios.
How can firms increase data analytics without incurring excessive overhead?
Market shifts away from submission-based pricing, toward independently validated reference prices.
Firm will add access points across APAC and EMEA markets.
Aim is to provide accurate, independently validated market data.