Attention Asset Managers, Asset Owners, Custodians, Investors, and anyone else who is tired of the high cost of benchmark data:

Joint research paper by BNY Mellon, Northern Trust, State Street, and TSG answers the question…

Are All Market Indexes Created Equal?

Over the past few years, the industry has witnessed a significant increase in the cost for market data, especially in the form of market indexes. Although some investors assume that market indexes are “free,” because they are easily viewed on the Internet, in fact market data providers incur costs to develop and maintain the indexes, and thus charge fees for their licensing and redistribution. These costs have risen to the point where it is becoming more common for custodians to pass them along to their clients. While in the past the reporting and distribution of index data might have been seen as a “cost of doing business,” this is no longer possible due to these rising costs.


Even as many of the major index providers have increased fees, the market has seen the emergence of low-cost providers. As a result, investors have more options. A challenge is to determine whether these competing options offer a comparable level of market assessment.

This paper addresses this issue by comparing several available indexes for both the global and US equity markets. The goal was to ascertain how closely related each index is to the others, based on their published methodologies and statistical comparisons. By providing a framework for the comparison of indexes, this research will help investors answer critical questions when evaluating index options, including:

  • When could a lower cost benchmark function effectively?
  • When might the use of a higher cost benchmark be justified because of specific construction methodologies, maintenance processes, or a particular brand value?

This research represents the culmination of over a year’s worth of data gathering, analysis, and research efforts. It builds on the principle guidelines to improve transparency on embedded fees for benchmark data. Its goal is to educate investors in order to help them make more informed benchmark selection decisions.

“We are incredibly excited to present this research as the results show that within the sets of comparable benchmarks we evaluated, each benchmark shows correlations greater than 99% with each of the other benchmarks. This suggests that investors may have the opportunity to consider lower-cost providers when selecting indexes. While it is limited to the US and global equity markets, we would expect to find similar results in many other markets,” said David Spaulding, DPS, CIPM, Founder and CEO of TSG.”


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