Nasdaq OMX Group (NasdaqGM: NDAQ) and S&P Dow Jones Indices are shopping for acquisitions to bolster their index offerings in what could be a sign of an imminent wave of consolidation for indexing space.
Executives from both companies “told Reuters in recent interviews that they would be interested in looking at bidding on index businesses that come to market,” reports Jessica Toonkel for Reuters.
Last week, Reuters reported that Northwestern Mutual Life Insurance is shopping its Russell Investments unit, home to $247 billion in assets under management.
Russell, which previously tried its hand at issuing its own ETFs, is the index provider for major ETFs including the iShares Russell 2000 ETF (NYSEArca: IWM) and the iShares Russell 2000 Growth ETF (NYSEArca: IWO).
Nasdaq now has over $1 trillion in assets tracking its various indices, Reuters reported. One of the largest ETFs benchmarked to a Nasdaq Index is the PowerShares QQQ (NasdaqGS: QQQ), also known as the “Nasdaq 100 tracking ETF.”
NASDAQ OMX Global Indexes also offers a suite of dividend indices which are used by popular dividend ETFs such as the Vanguard Dividend Appreciation ETF (NYSEArca: VIG). The new First Trust NASDAQ Rising Dividend Achievers Index (NasdaqGS: RDVY) is also benchmarked to a Nasdaq dividend index. [These High Achieving Dividend Indices Delivered in 2013]
Reuters also reported that Barclays is mulling a sale of its index business and its expected MSCI (NYSE: MSCI), Bloomberg, Thomson Reuters, FTSE and Markit could take a look at that operation.
While most ETF providers use third-party indices, some are increasingly using their own in-house indices. For example, the bulk of WisdomTree’s (NasdaqGM: WETF) ETFs are linked to the firm’s own indices and Market Vectors has, in recent years, converted a growing number of its ETFs to its own indices. [Nuclear Energy ETF Gets New Index]
In addition to S&P 500 ETFs, popular ETFs benchmarked to S&P Dow Jones Indices include the SPDR S&P Dividend ETF (NYSEArca: SDY) and the nine sector SPDR ETFs issued by State Street Global Advisors.
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of IWM and QQQ.