Analytical Insights is a quarterly publication providing clients with investment information that can be used in the process of monitoring global assets.
Managing Director, Head of Global Risk Solutions
BNY Mellon Asset Servicing
Market indexes are frequently used by institutional investors as an important aspect of the investment allocation and performance evaluation process. What some institutional investors may not know is that these indexes are not free; index vendors incur costs in creating, maintaining and distributing indexes, and institutions who include even top level index data in reports are subject to licensing requirements and often fees.
Over the past year, BNY Mellon and our peers in the industry have been working with The Spaulding Group, a performance measurement service firm, to help raise awareness on this industry issue. The challenge now facing the industry is how to deal with the increasing cost for this data. As many of the major index providers continue to increase fees, the market has seen a simultaneous emergence of additional providers. As the index landscape expands with more options, the challenge for investors is to determine whether each offering, at varying price points, provides a comparable level of market assessment.
In response to this issue, I am excited to share with you the research paper, Are All Market Indexes Created Equal?, published in The Journal of Performance Measurement (a Spaulding Group publication).
To read the paper, click here (PDF - 504KB).
As a service provider, BNY Mellon will be as transparent as we can on the costs and limitations associated with our client's benchmark choices. We hope that this research will make you more aware of the market data environment and the cost impacts of your decisions, ultimately leading to more efficient index production and distribution across the industry.
Debra A. Baker