Legacy lies at the heart of the Bloomberg indices wins
Bloomberg | Best Index Provider – Fixed Income ETFs | Best Index Provider – Commodity ETFs - Bloomberg Index Services Limited (BISL) has won Best Index Provider in its legacy sectors in this year’s awards.
Nick Gendron, Global Head of Fixed Income Index Product Management, explains that Bloomberg bought the index business from Barclays just five and a half years ago, and that he has been with the business through its various incarnations since 1992, while the legacy business has produced indices since the 1970s.
“We have been doing this for a long time and we have established many different client relationships across the globe,” he says.
Dave Gedeon, Global Head of Multi-Asset Indices at Bloomberg, says: “Bloomberg at its core has always been pushing on new development and ensuring our indices are both representing the marketplace and investors’ intended investment strategy through robust methodologies and ongoing maintenance, whether they face negative oil prices or sovereign nations being invaded.”
Gedeon explains that the Bloomberg Commodity Index (BCOM) is a leading benchmark for the asset class. “It’s been established for many years, and we are continuing to invest in the framework of BCOM, delivering what our clients need and want today as well as what we anticipate for the future.”
“Two years ago, the market went negative and now the upside volatility has seen large swings in energy for a variety of reasons such as lack of supply or global conflict. There has been an understanding that commodities’ value as a decorrelated asset class has been reawakened.”
Gendron, commenting on the European fixed income index award, says: “I believe our award win is a testament to our team in Europe who has been focused on our client relationships and supporting their specific needs. The growth of the ETF industry in Europe has certainly lagged the US, but we now see more than USD175 billion in assets in fixed income in European ETFs tied to our indices.”
Globally, Bloomberg’s indices are used in 480 ETFs in fixed income representing USD960 billion in assets.
“More customers rely on our fixed income indices more than any other index administrator and the European growth has been fantastic,” Gendron says. “It’s not just focused on one client. We’re proud to see all the key players in the fixed income space using our indices.”
Both Gedeon and Gendron report that ESG dominates everything. “Out of the top 40 ETFs tracking our indices in Europe, 10 are now ESG themed in terms of assets,” Gendron says. “Many clients that have fixed income products are likely going to either transfer it to an ESG themed product or wants an ESG product alongside a standard product.
And of course, both sectors have been impacted by the Russian invasion of Ukraine. “The liquidity of this market has truly dried up quite significantly. There are a lot of different scenarios but one of the key things within our business when we are faced with decisions where there may not be an obvious way forward, is to utilize our good governance protocols. We bring our clients in to the discussion through client consultations with index advisory councils in the US, Europe and Asia,” Gendron says.
End February figures showed 93 bonds with a Russia country of risk were 0.15 per cent of the Bloomberg Global Aggregate index, and due to be removed at the end of March.
Gedeon says: “The important part of this is not the index but everything going on in the world and ensuring we have a good resolution to address the conflict. The index has to reflect what is going on in the market and the Russian market has become uninvestable.”