Global index revenues increased 9.3 per cent in 2023, totalling a record USD5.8 billion, according to a benchmark study published by Burton Taylor International Consulting, part of TP ICAP’s Parameta Solutions division.
The new study provides a comprehensive analysis of the index industry with detailed reviews of leading index providers, including LSEG FTSE Russell, S&P Dow Jones Indices, MSCI, Nasdaq, ISS STOXX, Bloomberg, Alerian, ICE, Solactive, Morningstar, CRSP, and SIX.
Index industry revenues increased across all segments in 2023, with asset-based fees rising 11.1 per cent annually over the last five years, representing 49 per cent of total and subscription fee revenues. The remaining index revenues comprise non-recurring transaction revenue and revenue from index licensing for use with derivatives, OTC contracts, and structured products. Higher AUM in ETPs drove growth for most providers, specifically those generating the most revenues from asset-based fees.
Key findings in the study include:
MSCI, S&P Dow Jones Indices, and LSEG FTSE Russell account for more than 70 per cent of total index revenue.
Assets under management in ETFs rose by 26 per cent to USD11.4 trillion.
Investments continue to flow into Fixed Income, ESG and thematic funds, but traditional equity indices still capture two of every three dollars earned by providers.
“Fixed Income indices rebounded in 2023, leading annual segment growth at 16.1 per cent. Yet, targeted indices, led largely by sustainable themes related to ESG, capitalise on investors’ desire for exposure to more specific slices of the market had the fastest annual growth at 22.7 per cent over the last five years, and will continue to have a positive impact on index future industry revenues,” says Brad Bailey, Research Director at Burton Taylor. “Indexation continues to grow in a variety of market conditions and speaks to the innovation in the types of index choices that institutional and retail investors have today.”
