Insight Gisted Report February 2012

This issue of Insight examines the fast-growing footprint of index-tracking strategies in the investment funds industry. Indexing is once again a hot industry topic, mainly buoyed by the rapid pace of growth and developments of exchange-traded funds (ETFs). There are myriad factors driving the uptick in interest in indexing, including the current expectation that moderate capital market returns will be with us for the foreseeable future. Such an environment, aided by growing attention to the issue of fund fees and pricing by the regulators, is likely to encourage greater scrutiny of money management costs and the value of active management. The report identifies and quantifies the various product structures through which retail investors are accessing indexed strategies. This research is focused on index- and benchmark-tracking investment funds—whether they are mutual, individual segregated or exchange-traded. The analysis monitors changes in the product structures, asset class mix, delivery and pricing, with a view to identifying the key trends in the industry’s usage of indexed mandates. Our Trendlines article rounds out our coverage of indexing trends by documenting the indexed component of the market-linked note segment (market-linked GICs and market-linked notes).