Stoxx Taps into Demand for European Equities
Stoxx, a Swiss-based index provider, is setting its sights on creating products that enable Americans to tap into European equity markets.
An example is the Stoxx Global Broad Infrastructure Index, which has been licensed to FlexShares, managed by Northern Trust, for an exchange-traded fund (ETF).
With the global need for infrastructure estimated to be about $40 trillion, market participants require a well-defined approach to understand the listed global infrastructure universe.
“Last October, we launched an infrastructure product in combination with FlexShares, called FlexShares Stoxx Global Broad Infrastructure Index Fund,” said Rod Jones, executive director and head of North American sales at Stoxx. “That’s already gained $150 million in assets, which is pretty good for the ETF world.”
Stoxx is a relatively new entrant in the U.S., and is aware of the formidable competition in the world’s largest financial market.
“We’ve been here for three years, and so I think now we’re just starting to get traction,” Jones said. “We’re never going to replace the Russell 2000, so anything we do really has to have a very strong value proposition with the marketplace, and the Stoxx Global Broad Infrastructure Index is a global underlying basket of securities that has what we consider to be some of our best kind of intellectual property.”
The company’s formula for success is to develop strong ideas that can be commercially viable in the marketplace. “For us, a home-run is when someone looks to us to do things that are kind of non-standard,” said Jones. “This is in line with Stoxx’s aspirations to have a global footprint. Obviously we have a very good business in Europe, but we need to be able to do things in the United States.”
Stoxx, a leader in benchmarking European equity exposure, has developed a Eurozone Small Cap index (called the EURO Stoxx Small), which State Street has licensed as an underlying for an exchange-traded product to be launched next month.
“Currently, there’s only one way to get exposure to the Europe Small Cap market in the U.S., and that’s with WisdomTree,” said Jones.
EURO Stoxx Small is the first product in the U.S. that’s institutional-quality in the sense that it’s based on one of Stoxx’s flagship benchmark indices for Europe, Jones said.
“What small-cap investors want is, ‘Just give me what you think are the small-cap names that represent the future of a given market, like the European market,’” he said. “This is the first benchmark product that truly addresses that need in the marketplace. So, we think that it’s really a valuable exposure to have, and it’s in line with what our clients have been telling us.”
With a European recovery apparently underway, U.S.-based investors are clamoring for ways to access European equity exposure.
“We have a large cap product with State Street right now for the EURO Stoxx 50 Index,” said Jones. “But I think people are moving away from large Cap to more of a mid cap or smaller cap perspective or investment thesis. Then we have some other things in the pipeline that will likely get listed this year that are in the process they’re either signed, or they’re in the process of being signed. So there’s a lot of activity going on.”
The addition of Essentia behavioral analytics solutions is an extension of Northern Trust Whole Office.
Upstart exchange has seen market share increase to near 4%.
Goldman Sachs Asset Management’s fundamental equity business manages over $20bn in thematic equities.
Data extraction and integration is the second stage of a digitization process.
With Ankit Mittal, Business Change Manager, Global Trading, Schroders