Index provider S&P Dow Jones Indices and market risk and portfolio analytics specialists Axioma have entered into a strategic agreement to collaborate on the development of optimized factor-based strategy indices.

Sebastian Ceria, CEO of Axioma.

The engagement brings together S&P DJI’s global brand recognition and capabilities in indices serving institutions and intermediaries, with Axioma’s robust analytical tool kit and expertise.

The collaboration looks to result in innovative S&P DJI branded indices, powered by Axioma, purposefully designed to present optimized single- and multi-factor solutions that advance the forefront of smart beta, ESG and related investment themes.

“We are pleased to work together with Axioma to leverage their systematic portfolio-construction capabilities and risk analytics, to further expand our factor index offering,” said Jamie Farmer, Chief Commercial Officer, S&P Dow Jones Indices.

He added, “This collaboration will accelerate the pace of innovation to deliver transparent, strategic factor indices that are designed to meet the increasing demand for benchmarks that encapsulate quantitative investment methodologies.”

“Axioma’s systematic portfolio-construction techniques and factor-based risk models are increasingly being used in best-of-breed indexing,” said Sebastian Ceria, CEO of Axioma. “We look forward to collaborating with S&P Dow Jones Indices on this exciting next generation of factor-based strategies.”

This is not the first time Axioma has collaborated with an index provider. The firm already has relationships with Stoxx, FTSE Russell and China Securities Index, and has contributed to the development of smart beta indices that have successfully been licensed to ETF issuers.

Factor investing, and more broadly smart beta, has been a sweet spot in the ETF industry with assets under management growing to $687bn, according to data from ETFGI, on the back of thirty-two consecutive months of positive flows.