Scientific Beta

European Pensions: "The survey revealed a strong desire from participants to be able to conduct detailed due diligence on index concepts on the basis of full transparency of methodologies, index levels, and constituent data. More than 88 per cent of respondents support the clarification of index concepts through clear disclosure of the objectives of indices, and the identification of metrics that allow them to measure the extent to which these objectives have been achieved."

European Pensions 18/03/2014

"(...) Europe’s largest pension funds are unimpressed by the standard of transparency from index providers, according to new research. A survey covering 109 of Europe’s largest institutional investors revealed concerns over conflicts of interest from index providers, and a support for more rather than less regulation of the industry. EDHEC Risk Institute’s study found just 34.9 per cent of institutional investors were ‘very’ or ‘somewhat’ satisfied with the level of transparency around indices. Equity indices calculated from observable transaction prices were considered to be safe from conflicts of interest by just 16.5 per cent of respondents. More than 62 per cent of investors felt conflicts are broader than those arising from the ownership or control structure of a provider. Accordingly, good governance was considered to be sufficient to minimise conflicts of interest by just 12 per cent of respondents, while 82.5 per cent felt transparency was the best mitigating factor. EDHEC-Risk Institute director Noël Amenc said transparency guarantees the efficiency of an index market that is becoming “increasingly complex and sophisticated”. (...) The survey’s respondents include Europe’s largest pension and reserve funds, insurance and provident institutions and their asset management subsidiaries. The survey revealed a strong desire from participants to be able to conduct detailed due diligence on index concepts on the basis of full transparency of methodologies, index levels, and constituent data. More than 88 per cent of respondents support the clarification of index concepts through clear disclosure of the objectives of indices, and the identification of metrics that allow them to measure the extent to which these objectives have been achieved. (...)"