2019 was a turning point year
STOXX: Best European Index Provider – Qontigo´s index provider, STOXX had an extraordinary year in 2019, not least in its September merger with US-analytic firm Axioma to become Qontigo. The resulting company is majority owned by Deutsche Boerse and has the index capabilities of STOXX and DAX, as well as the analytical skills of Axioma.
Roberto Lazzarotto, global head of sales and senior managing director, says: “2019 in many aspects has been a turning point because when you go through such a merger it takes a lot of time and work. It was challenging in the sense that we had to focus on the great thing that the merger was bringing to us in terms of solutions and products and also geographically, with Axioma’s biggest footprint in the US and ours in Europe.”
The merger was very complementary on all sides, Lazzarotto says, and though quickly executed took up a lot of his firm’s time. “But, of course, we haven’t stopped our main activities and we have launched some milestone type indices in 2019.”
This included the launch of a new STOXX ESG index family under the name of ESG-X, the X standing for exclusion. “This was our wish to make ESG solutions really mainstream because we created these indices following the guidance of the markets, with a large consultation that involved asset owners and managers across Europe.”
Lazzarotto says that STOXX effectively wanted to create indices with low tracking errors against the benchmark. To provide liquidity for the market, STOXX invited Eurex, also part of the Deutsche Boerse, to launch futures on the new indices, particularly the STOXX Europe 600 ESG-X version, also complemented with a low carbon solution and a climate impact version both based on the EURO STOXX 50.
“It was really important to address the entire eco-system, in order to succeed” Lazzarotto says. “We had to have the right approach from the methodology perspective and also one that the markets are comfortable with.”
Providing derivatives allowed investors to take exposure following ESG principles or banks to hedge positions in a cost-efficient manner.
The result is a large adoption by the market of the strategy with volumes traded in few months in excess of EUR1 billion, prompting the launch of investment vehicles such as ETFs.
“It’s a really good sign that we have succeeded in creating liquidity in what were still niche investments,” Lazzarotto says.
Thematic investing has been very important to STOXX as well, with themes based on mega trends and their sub sectors. “We like to look at the future changes and evolutions in societies that will shape how we live and operate for generations to come.”
Within the family of thematic indices there are around 17 that explore these mega trends, such as an ageing population and everything that goes with it.
Factor indices also became a focus for Qontigo with the merger of STOXX and Axioma. “Factors are more relevant in our indices for the great analytic solutions that Axioma provide which helped re-engineer our factor and multi-factor index proposal.”
Early 2020’s market volatility was an opportunity for Qontigo getting closer to their clients and listening what they needed. “The index reflects market conditions and we live through those along with our clients” Lazzarotto says.
“Clients want certainty as to what is happening within the index and that is our role. Index providers need their decisions to be rules-based in a transparent way that everyone can refer to.”
Global Head of Sales & Senior Managing Director, STOXX
Roberto Lazzarotto is responsible for the distribution and promotion of innovative new index concepts across all asset classes branded STOXX and DAX to a variety of institutional clients. Prior to joining STOXX, Roberto led Institutional Sales as Global Head of Equity Derivatives at UniCredit Bank AG. Roberto has over 20 years of experience in the capital markets industry, primarily in the investment banking divisions of SBC Warburg and Merrill Lynch, where he held a number of senior positions. Serving an institutional clientele, he has developed expertise in the field of cross assets derivatives and convertible bonds to the benefit of traditional and alternative portfolio management.