The number of global indexes increased 4.43 per cent this year, led by environmental, social and governance indexes, which grew to new records, according to a new survey by the Index Industry Association.
Although overall growth for 2022 slightly trailed 2021’s pace of nearly five per cent for the industry, the number of ESG indexes globally grew 55 per cent and surpassed 50,000 worldwide across asset classes for the first time.
The convergence of two major trends over the last three years — the rapid increase in ESG and fixed income indexes — resulted in the number of ESG fixed income indexes increasing by a record 95.8 per cent, well above the previous record of 61.09 per cent in 2021, according to the survey.
Equity ESG indexes grew at a slower, but extremely rapid rate of 24.15 per cent and, for the first time, were outnumbered by fixed income ESG indexes. Global fixed income ESG growth was the fastest at 122.5 per cent with Europe, the Middle East and Africa following at 92.5 per cent growth from the previous survey.
Overall fixed income indexes increased 4.52 per cent, slightly outpacing equities, which increased 4.29 per cent. While the Americas market has more fixed income indexes than other regions, the IIA noted distribution of indexes across all regions remained stable and consistent with recent years. However, this is in contrast to equity indexes, where the Americas have the fewest indexes globally. Instead, the region has a much larger number of securitization, high yield and municipal bond indexes compared to the other regions.
“Highlighted again this year by record growth in ESG, index providers are empowering investors with the ability to define, track and better understand an ever-broadening range of financial markets, sectors, investment styles and asset classes,” said Rick Redding, chief executive officer of the IIA, in a press release. “The results also reveal index providers are diversifying into additional asset classes and increasing competition in every major category.”