“We look at the brand of the index provider, their control processes, because reputation is very important. Once we get down to specific indices, quite often we’re faced with a couple of choices,” said Scott Ebner, head of global ETF product development at SSgA.
However, as the broad, diversified index space becomes “pretty much build out,” commented Alexander Matturri, executive managing partner at S&P, large providers are now looking at alternative options offered by smaller developers, like Research Affiliates. [Dynamic Indexing: Is It Enough of a Safety Net?]
Not to be out outdone, S&P, Russell and MSCI have also begun developing and licensing concepts outside of their traditional cap-weighted methodologies. Rydex SGI has signed licensing deals with Russell and MSCI for equal-weight emerging markets and U.S. equity ETFs. Furthermore, ideas for indices based on volatility, momentum and correlation, and segmenting existing emerging market indices are just some of the ways ETF sponsors will keep on expanding the fund universe. [How Russell’s New ETFs are Different.]
For more information on ETF indexing, visit our indexing category.
Max Chen contributed to this article.