STOXX Ltd - Most Innovative Index Provider
STOXX has been providing investable and innovative index solutions since 1998, growing from a leading European index specialist to a global index provider. STOXX was formed in 1997 and in 2009, after some corporate change, became a joint venture between Deutsche Börse AG and SIX AG after Dow Jones & Co's exit. In 2015 Deutsche Börse purchased the remaining 49.9 per cent shares of STOXX from SIX along with the remaining shares of the joint venture Indexium AG.
Global head of sales and asset owners' consulting, Matteo Andreetto (pictured), explains: "We are now fully owned by the global market player Deutsche Börse that covers the entire process chain and provides an excellent technological infrastructure. We are one of very few index companies integrated in such a large exchange and as the index division of Deutsche Börse there are significant benefits."
Some 787 indices were launched last year and as of 31 December, 2015, 190 ETFs globally with USD74.2 billion in AUM were based on STOXX indices.
But also in the Structured Products space is STOXX very active, and holds a market leading position. One of the most popular indices for Structured Products users has been the family of products based on the Sharpe Ratio of stocks. Andreetto says: "This was a product licensed to JP Morgan and included stocks with the highest Sharpe ratio, so excluding those with the lowest dividend yield and liquidity."
In June 2015 the STOXX True Exposure index family was introduced, STOXX TRU. The TRU range is based on international exposure. "These indices allow investments in predefined countries or regions by selecting companies that have a dominant economic exposure to the targeted area," Andreetto says.
In the case of the S&P 500, for example, a significant portion of the companies within that index are actually deriving their revenues from outside the US, while only about 65 per cent of revenues are generated from within the US.
"So what we did is create an index that is selecting companies listed in the US that are also exposed to the US and so creating a pure US index, hence the name TRU."
The thinking behind this product is that today world economies are not insulated but suffer from contagion from each other.
"What we have seen, for example, in the case of the China crisis at the beginning of January is that while the China market was down significantly, the S&P 500 was down 7.9 per cent and the STOXX TRU USA 100 per cent outperformed by nearly 2 per cent – it offers a safer access to America," Andreetto explains.
In keeping with its tradition of innovation, STOXX launched the STOXX Low Carbon index family in cooperation with the renowned carbon data providers CDP and South Pole Group in February.
"Especially the STOXX Global Climate Change Leaders Index is an innovative solution as it is the first ever global index that is based on CDP's global Climate A list," says Andreetto. This index includes constituents that are forward-looking leaders who are publicly committed to reducing carbon emissions. In addition to direct and indirect emissions, it also includes emissions that are tied to a company's supply chain–the so-called Scope 3.
"Looking at recent trends in the industry, smart beta is an efficient way of capturing exposures that were previously only captured by active managers," Andreetto says. "There is also continuing attention from institutions on the cost component of active investment. ETFs are preferential instruments when you are down to portfolio construction driven by consultants.