The world of indexing this week witnessed the joining of two of its largest players, after a previously announced merger between the companies behind the S&P 500 and the Dow Jones industrial average became a reality. The new indexing unit—S&P Dow Jones Indices—can stake a claim to providing the benchmark to roughly one in three ETFs in the U.S. today, worth about a third of total U.S. ETF assets of $1.189 trillion. Alexander Matturri, the S&P Indices executive who was picked to lead the new indexing giant, told IndexUniverse Correspondent Cinthia Murphy that he aims to make the world’s largest index provider even larger, as it expands its offerings into local markets globally.

Murphy: The new S&P Dow Jones Indices joint venture is behind 830,000 benchmarks and 575 ETFs with $387 billion in assets. You can basically lay claim to one in three ETFs and a third of investor assets in the U.S. ETF market today. Who do you see as your main competitor now and how do they measure up?

Matturri: We have a lot of competitors. But what we have that’s unique now is that combining two iconic brands will allow us to expand our ability to create products that are designed not only for ETF providers, but also for asset managers and exchanges all around the globe in a better, faster way. Our business is much broader in scope than many of our competitors’.

Murphy: What unexplored areas of the indexing world do you see S&P/DJ moving into? MSCI, for instance, is a big player in the international equities space. Is that a frontier for you?

Matturri: We pride ourselves on the breadth of our product offering. We do have indices in the international space, but we are looking to create more local market indices in partnership with exchanges—all part of a global expansion into local markets. We want to expand in commodities, fixed income, currencies and emerging markets as well.

Murphy: After this merger, should we expect to see more consolidation ahead? And is having fewer index providers ultimately good for investors?

Matturri: Consolidation is good from a customer’s perspective because of the amount of resources that become available when companies join forces. What’s interesting about us is that most index businesses are part of larger organizations. We are pioneers in the structure we created, which is unique because it will allow us to bring other partners into the business as we look to grow organically. An index provider that can provide an array of products and services across multiple asset classes and markets is a good thing for customers—many want to deal with us across multiple segments. So, size does help.

Murphy: Will the merger affect index-licensing fees? In other words, will your indexes now be priced more competitively given the new economies of scale and shared expertise and technology?

Matturri: It’s our policy not to discuss fees. I can say that it’s a very competitive marketplace and the barriers to get into the market aren’t that high. They are, however, driven by the ability to meet customers’ needs and innovate. Price isn’t a driving factor here—innovation is.

Previous Page

1  |  2

| Full Article  |Next Page