{"title":"The Perceived Advantages of Self-Indexing for Institutional Equity Investors","authors":"Benjamin Herzog, Jenna Jones, Shahyar Safaee","doi":"10.3905/jbis.2023.1.043","DOIUrl":null,"url":null,"abstract":"Institutional asset owners increasingly seek to customize index-linked strategies in order to take their ESG and climate preferences into consideration. This trend away from cap-weighted benchmarks does, however, bring forth challenges for asset owners in fulfilling their fiduciary duties. To address these issues, a new self-indexing approach can provide investors with the tools to fully control the index design process and independently monitor the direct and indirect impacts of customization decisions. A 2023 EDHEC survey of institutional asset owners in North America and Europe reveals that less than half of respondents have the capacity to fully analyze their risk exposures, but more than 90% anticipate the further development of digitalized customization capabilities in the institutional passive investment industry. These findings highlight the significant potential for the use of self-indexing as a solution to help institutional asset owners fulfill their fiduciary responsibilities.","PeriodicalId":284314,"journal":{"name":"The Journal of Beta Investment Strategies","volume":"21 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2023-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"The Journal of Beta Investment Strategies","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.3905/jbis.2023.1.043","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
Institutional asset owners increasingly seek to customize index-linked strategies in order to take their ESG and climate preferences into consideration. This trend away from cap-weighted benchmarks does, however, bring forth challenges for asset owners in fulfilling their fiduciary duties. To address these issues, a new self-indexing approach can provide investors with the tools to fully control the index design process and independently monitor the direct and indirect impacts of customization decisions. A 2023 EDHEC survey of institutional asset owners in North America and Europe reveals that less than half of respondents have the capacity to fully analyze their risk exposures, but more than 90% anticipate the further development of digitalized customization capabilities in the institutional passive investment industry. These findings highlight the significant potential for the use of self-indexing as a solution to help institutional asset owners fulfill their fiduciary responsibilities.