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IIA’s fourth annual benchmark survey reveals significant growth in ESG

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Index Industry Association’s (IIA) fourth annual global benchmark survey shows an industry that is growing and diversifying its products and services to meet expanding investor needs. Main growth drivers this year include indices measuring environmental, social and governance (ESG) criteria, which saw a 40.2 per cent increase, and fixed income indices, which had a 7.1 per cent increase.

Rick Redding, the CEO of IIA, says: “The survey’s 2020 results demonstrate a highly competitive industry that continues to broaden its offerings to meet investor demand. Indices today are transparent and reliable representations of market segments covering a wide spectrum of asset classes and investment themes, and an integral piece of the global investor’s toolkit.” 

While 2020 has been marked by unprecedented levels of market volatility, disruption and investor uncertainty amidst the global Covid-19 pandemic, the overall number of indices climbed by approximately three percent to 3.05 million as investors looked to the IIA members for solutions, unbiased signals and timely data. The IIA members also continued to innovate and diversify, responding to investors’ needs with new offerings, particularly in the ESG and fixed income spaces.

The number of ESG indices globally rose by 40.2 per cent in the past year following a 13.9 per cent rise from 2018 to 2019, registering the highest year-on-year increase in any single major index class in the survey’s four-year history. Fixed income growth has also been steady, with a nearly 15 per cent rise in the number of indices measuring global bond markets over the past two years, with notable growth in the ESG sector within fixed income as product issuers look to build more-diversified and ESG-compliant products. 

Adds Redding: “Delving deeper, growth in fixed income was demonstrated across the full range of index subcategories, whereas equities growth was primarily concentrated in industry/sector, thematic, and ESG-related products.”

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