VettaFi Head of Index Products Brian Coco and Head of Index Strategy Jane Edmondson discussed custom indexing at Exchange. In the session called “How and why asset managers are turning to custom indexing,” Coco and Edmonson explored the latest data and research driving new and innovative approaches to investing. They also covered how index providers can help transform a great idea into a concrete reality.
“There’s been a lot of talk about active ETFs,” Edmondson noted. According to Coco, active managers are frequently using custom indexes. Coco said, “Even though many of them are active, they are still using benchmarks behind the scenes.”
VettaFI’s evolution in indexing
Regarding VettaFi’s evolution, Coco explained, “It’s all premised on one indexing platform and one distribution platform.” VettaFi has acquired eight firms, and Coco shared that beyond bringing those strategies in, it has also benefitted from bringing in the innovators behind them.
Coco also shared his journey in the industry, which started at Credit Suisse. When TMX VettaFi was ready to be in the bond indices business, Coco had the unique opportunity to get his own work back. “It’s really fun to get your baby back,” he quipped.
Fixed Income index possibilities
“This acquisition really gives us the building blocks, which is table stakes if you want to innovate,” Coco offered. “Increasingly, people are looking for specific duration targets. They are looking for indices that are better designed for the ETF wrapper.”
VettaFi Head of Index Products Brian Coco and Head of Index Strategy Jane Edmondson discussing custom indexing.
Being better partners
Coco said that the ongoing partnership throughout the product lifecycle has made VettaFi’s indexing services stand out. “Our partnership doesn’t end when the index is licensed – that’s when it begins.” Having a marketing arm that helps grow the product has been the differentiator
Coco on theme
Coco also spoke about interesting approaches to broader thematic ideas, sharing one idea that involved looking at the average age of workers in given regions and using that data.“
When I think about the things driving us right now, I think about robotics.” He doesn’t know when C3PO-style robots will be in every house, but it is coming. Edmonson noted that most people already have robot vacuums.
Coco gets direct-to-direct indexing
Direct indexing has been disruptive to the ETF and index industry. “The platforms are really coming into their own partnering with index providers to develop better index solutions.”
