Stoxx Develops Across the Pond
European indexing leader jumpstarts in the U.S. by offering “alternative beta.”
Global index provider, STOXX Ltd., best known leading European equity indices Euro Stoxx 50, Stoxx Europe 50 and Stoxx Europe 600, is looking to gain market share in the U.S. Other players in this space are hefty competitors, notably Russell Investments in the U.S. and MSCI, in the global space.
“We’re new to the market so we’re gathering critical mass but it’s been well received,” said Rod Jones, executive director and head of North American sales. With a fresh sense of entrepreneurialism, Jones is keen to offer something different than the above providers—what he calls “alternative beta,” and an area of leveled playing field.
One product in the firm’s alternative passive investing space is the Euro Stoxx 50 Risk Control 20% Index. The new index measures the performance of a hypothetical portfolio which aims to control the risk of the underlying Euro Stoxx 50 Index.
“Risk control is there so if there’s a drawdown, you don’t lose too much,” Jones said.
The STOXX indices are licensed to over 400 companies around the world as underlyings for exchange traded funds (ETFs), futures & options, structured products and passively-managed investment funds.
STOXX Ltd. is the marketing agent for the indices of Deutsche Boerse AG and SIX Group AG, amongst them the DAX and the SMI indices.
Certainly, Europe’s macro debt problems have trickled down into the concerned minds of Stoxx’s investors that rely on the firm’s products as primary measurements of European companies. As a result of client feedback, some of the firm’s products have customized indices to exclude financial stocks for some concerned clients.
The firm prides itself on having a transparent methodology for their products. The theme of transparency has spurred other products, such as the ESG (environmental, social governance) leaders index.
“Institutions that are focused on private clients—such as the wealth of families—right to invest the right way and make a difference,” said Jones, who stressed ESG investing is trending amongst institutional investors. Certainly, endowments and foundations grounded in a nonprofit mission statement have increasingly adapted sustainability principles.
CEDX opened on 6 September, offering contracts on Cboe Europe single country and pan-European indices.
The MOU covers certain security-based swap dealers and participants.
Equity underwriting on European exchanges rose 70% in the first half.
The analysis is based on transactions publicly reported by 30 European APAs and venues.
A similar service is available on the BIDS platform in the US equity market.