INDEX PROVIDER OF THE YEAR
WINNER: Solactive AG
The Index Provider of the Year award was a bit of a wild ride this time. Top-notch index providers such as S&P Dow Jones Indices, FTSE Russell and MSCI didn’t even make it onto the final ballot. But well-known independent index provider Solactive AG repeated its win from the 2017 awards for 2019.
Founded in 2007 in Germany, the boutique firm’s benchmarks now underlie more than 450 ETFs worldwide, and Solactive-branded indexes currently serve as the underpinnings for 63 ETFs in the U.S. alone. The largest of those is the $3 billion Xtrackers USD High Yield Corporate Bond ETF (HYLB), followed by the $497 million Global X SuperDividend ETF (SDIV) and the $388 million Global X Lithium & Battery Tech ETF (LIT).
Solactive offers its own lineup of benchmarks as well as customized products tailored to client specifications. It’s fairly unique in the index space, as it was founded independently as an index provider rather than springing into existence as the offshoot of a larger company.
In its dozen or so years of existence, the firm has steadily worked its way into the fabric of the global ETF industry, not to mention other financial vehicles like structured products. Solactive offers its own lineup of benchmarks as well as customized products tailored to client specifications.
INDEX OF THE YEAR
WINNER: Life + Liberty Freedom 100 Emerging Markets Index
The Index of the Year for 2019 underlies one of the most-talked-about ETFs of the year, the Freedom 100 Emerging Market ETF (FRDM), which was itself nominated for multiple awards and won Best New International/Global Equity ETF – 2019.
The Life + Liberty Freedom 100 Emerging Markets Index has 100 components selected from developing markets that are arrived at in a manner largely unprecedented in the index space. The index evaluates countries based on criteria linked to the concepts of life and liberty. For “life,” the methodology considers the existence of terrorism, human trafficking, torture and political detentions in a country, while for “liberty,” the methodology looks at the presence of rule of law, due process, freedom of the press, freedom of religion and freedom of assembly.
There’s also a set of property-related standards that evaluate countries based on marginal tax rates, access to international trade, business regulations, established monetary and fiscal institutions, and size of government.
The end result is that prominent emerging markets are excluded from the index. China and Russia, for example, simply don’t meet the benchmark’s freedom standards. That translates into a dramatically different type of exposure to emerging markets than standard indexes offer.