The Index Industry Association (IIA), an industry trade group for index providers, has released the results of its fifth annual global benchmark survey.

Rick Redding, CEO, Index Industry Association.

The survey reveals an industry that is growing and diversifying its products to meet evolving investor needs, with the overall number of indices offered by its members climbing by approximately 5%.

The IIA counts many of the industry’s biggest names among its membership including MSCI, S&P/Dow Jones Indices, FTSE Russell, Bloomberg Indices, IHS Markit and Qontigo.

According to the survey, the largest drivers of index production over the past year were the integration of environmental, social, and governance (ESG) criteria and, to a lesser extent, fixed income coverage.

Rick Redding, IIA’s CEO, said: “The index industry continues to broaden and innovate its offerings in this highly competitive environment to address investor demand. For the second consecutive year, we have seen record-breaking growth in the number of ESG indices.”

The growth in ESG – there was a 43.2% increase in the number of ESG-related indices – confirms the findings of the IIA’s ESG survey earlier this year, which found that 85% of asset managers consider ESG a high priority for their companies and anticipate the proportion of ESG assets in their portfolios to rise from an expected 26.7% in twelve months’ time to 43.6% in five years’ time.

In fixed income, the overall number of indices increased by 7.7%. Within the asset class, the number of indices measuring global bond markets rose nearly 15%, and the number of indices measuring high-yield assets by 12.3%, and Composites by 9.18%. But the big story was, once again, ESG with the survey identifying a record-breaking 61% growth in the number of ESG-related fixed income indices as asset managers look to build more diversified and ESG-compliant products.

“The growth in fixed income indices has been driven primarily by the tremendous growth in ESG along with diversification into high yield and composites. Fixed income growth shows no signs of slowing and mirrors the larger index industry in its capacity for ESG growth and diversification,” said Redding.

On the non-ESG equity side, index providers continued to push into thematics with the number of thematic indices growing by 27.25%, though still making up a relatively small percentage of equity indices overall.

Equities continued to be the largest asset class, comprising 76% of indices, compared with 23% focused on fixed income.

The survey did not offer any insight into the amount of assets under management benchmarked to indices, either overall or within asset classes.