STOXX Ltd - Most Innovative Index Provider
2016's figures for the Deutsche Börse Group revealed that its indices business STOXX is one of the strongest growth engines for the company.
Matteo Andreetto (pictured), CEO, STOXX says that STOXX has grown globally year after year since he joined and is the leader in the structured products space with a market share of over 86 per cent.
The firm's strength, he believes, comes from its background in derivatives and structured products which has driven the development of intelligent indices and factor or smart beta products.
Andreetto says: "Alternative weighting schemes have been around for a long time. Our background in creating investment solutions and a smart beta library of nearly 20 years help a lot when you think about bringing new products to the market."
In terms of ETF assets, the end of 2016 saw USD95 billion in assets tracking STOXX and DAX indices. Over the year, the volatility spikes caused outflows but then there was a strong end of the year, mostly, Andreetto says, driven by asset allocation to European equities.
Three of the top ETFs in Europe and approximately 25 per cent of all assets under management are based on STOXX indices. "We are the number one provider in the derivatives segment for European exposure globally," Andreetto says. "It's a long-lasting legacy from the association of Europe with STOXX as a brand driven by innovation."
The use of ESG, single and multi-factor in Europe, market neutral and not market neutral has enabled STOXX to diversify the market universe, Andreetto says.
"Across the board the institutional investors are a focused on the early adoption of innovation to address risk premia in their portfolio."
Innovation in the STOXX indices has seen a new range of ETFs from iShares which are based on iSTOXX FactSet Thematic Indices that capture megatrends in investing such as the ageing population, the rise of automation and robotics, digitalisation and breakthrough healthcare.
"We went for open architecture on two different levels," Andreetto explains. "On the one side on data input, we partner up with the best data provider to create a differentiated product – it's not just the price but its ESG scores, or carbon footprint.
"And we are a best in class provider and that distinguishes us from other index providers who use their own proprietary data. For instance, for our carbon footprint product, we used two different data sources which enabled us to combine actual and projected exposures based on industry trends."
Some of the products are generated using STOXX's own library and research team and they will also work with academics or institutional investors or ETF providers who also have their own research department. "They know that our indices are independent, objective, transparent, liquid and very tradeable."
Politics played an increasing role in volatility and financial markets generally over 2016 and will continue to do so, Andreetto believes. "With a defensive and innovative approach you can create the right balance between risk and return," he says. "It's not only the right tool but the right suite of tools. I think the way for us to keep growing our business is to stick to what we are good at, generating rule based, qualitative, transparent and liquid investment strategies. None of our indices are committee based, everything is rule based which is why the clients who use our products know that, with STOXX, there are no surprises."
Last year saw STOXX move into the fixed income arena with the new fixed income product range which started with the launch of the EURO STOXX 50 Corporate Bond Index, in April, which is the fixed income equivalent of the EURO STOXX 50, including the bonds of the blue-chip companies in the Eurozone.