The Financial Times is returning to the index business by partnering with Wilshire, an investment advisory group, to develop indices with a particular focus on environmental, social and governance investment products.
“The FT is going back to its roots,” said Mark Makepeace, Wilshire chief executive and former head of FTSE Russell, one of the top index providers alongside MSCI and S&P Global.
The FT Group sold its 50 per cent stake in what later became FTSE Russell to the London Stock Exchange for £450m in 2011.
After a decade-long non-compete clause, the FT is returning to the sector with the backing of Nikkei, which bought the UK media group from Pearson five years ago. The Japanese group is a leading index provider in Asia and will collaborate with the FT/Wilshire partnership.
The Wilshire 5000 index series will be relaunched as the FT Wilshire 5000 US Series. “That will be an ideal starting point to base equity index products,” said Makepeace. “There is also lots of potential to work with Nikkei.”
Makepeace was named chief executive of Wilshire in January after the business was acquired by CC Capital, a private investment firm, and Motive Partners, a private equity firm.
A number of former FTSE Russell colleagues will join Makepeace at Wilshire, including Nick Teunon, former chief financial officer, who takes up the same role.
FT Wilshire will also provide commentary, insights and data sets that can help investors navigate the changes driving financial markets.
Wilshire estimates the index industry grew 11 per cent per annum between 2015 and 2019, becoming a $3.7bn market.
Indexing has boomed in the past decade, driven by the rise of passive investing vehicles such as exchange traded funds which track an underlying basket of equities and bonds. The use of data and analytics has also become important for investors seeking to outperform benchmarks.
More than $30tn is invested globally in passive tracker funds and mandates that follow indices, according to PwC. The professional services provider forecasts that passive assets will exceed $40tn by the end of 2025, accounting for nearly a third of the investment industry’s total assets.
“We are only at the beginning of the boom in indexing for bonds and ESG. These are important areas of growth,” said Makepeace.
A global survey by the Index Industry Association highlighted ESG as the leading growth driver, recording a 40 per cent increase in the number of indices over the past year, up from 13.9 per cent growth in the previous year.
MSCI and rival index providers have also expanded aggressively into ESG.
“MSCI stands out as the 800-pound gorilla,” said Ben Johnson, director of passive strategies research at Morningstar. “They have successfully partnered with [BlackRock-owned] iShares to launch ESG products around the world. Both MSCI and BlackRock are very vocal about markets embracing ESG and that trend is not lost on anyone.”
John Ridding, chief executive of the Financial Times Group, said: “This collaboration will help us reinforce our brand in growth markets and strengthen our position as the leading global financial news organisation.”
Financial terms were not disclosed.
Last year, the FT added a new ETF Hub to its FT.com website, with a range of data and analysis covering the fast-growing exchange traded fund market.
Wilshire, which is based in Santa Monica, California, advises on more than $1.1tn in assets and manages $76bn in assets.
It was founded in 1972 by Dennis Tito, former Nasa engineer and later the first space tourist. Tito joined a Russian Soyuz mission in 2001.