For institutional investors considering how to adjust their portfolios to the new world of the euro, indexing could be an answer, at least on a short term basis.We think the arrival of the euro will give indexing a boost," says Michael Schanz, managing director of Zurich-based Stoxx, which operates the Dow Jones STOXX Indices. "We hear institutions saying: 'We want to get into the European market, but we are not too familiar with the new market, so we will buy an index'."As an investment theme, indexing is going to be-come more important, Schanz maintains. He sees a number of scenarios favouring such a development. He paints the picture of an US investor unsure of the Europe/Euroland distinctions, and regards indexing as a logical solution. "With 30% or so of US pension funds already on an indexed basis, they will automatically reach for an appropriate index. They are saying: 'We don't know Europe, but we need to do something, let's buy an index!'"Schanz also finds vestiges of the same thinking among some UK andother non-Euro-zone based investors, who perceive there are gaps in their European expertise. Their scenario is: "We are familiar with what is going on in Europe, but until we get to grips with French, German and Italian shares and have the required research laid on, we will do some indexing in the meantime."But even some investors in the Euro-zone may well find indexing suits their needs. "All of a sudden, the currency restrictions have disappeared, so I can buy Spanish, Italian and French stocks to an extent not possible before." But to avail fully of the new freedoms may not be practical, as the institution may be in the same boat as the UK investor and not feel sufficiently au fait to embark on investing actively across borders. An index may the ideal interim solution. "We think indexing is going to be a significant factor in the transition to the euro for these different reasons." For the needs of such investors, he thinks that the narrower based indexes will be most used.. "We think it will be a matter of investors choosing the most liquid and smallest index." These include his firm's two blue chip indices covering either the top 50 pan European or Euro-zone corporates. "These are being used mainly for derivatives and hedging, as well as indexing purposes." While the larger indices are designed for benchmarking purposes and so are more familiar to fund managers, he points out: " Apart from its liquidity advantages, the blue chip index correlates to between 98 and 99% of the movement of the broad indexes. This is important, as for indexing, your proxy has to be very accurate." Fennell Betson"