The number of U.S. exchange traded funds is shooting past the 1,000 milestone. While the ETF industry has been expanding, the industry for index providers has also exploded along with new product offerings.

ETF sponsors are moving beyond the broad diversified fund space and looking into targeted niche products, which has also pushed the need for new indices to meet the evolution in ETFs.

Most ETFs follow indices managed by large, prominent index providers, such as S&P, Russell, MSCI and Barclays Capital, reports Jackie Noblett for Financial Times. New index developments will have to be tailored to reflect the needs of innovative fund products.

“ETFs are entering a new expansionary phase,” remarked Ted Niggli, head of indices at MSCI, in the report.

Fund sponsors usually look at large index providers since they have the brand, experience and scale needed to expand upon existing fund products.

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