Morgan Stanley Capital Internation indices are used by four times as many fund managers in continental Europe as those of its nearest rival, according to a survey by Merrill Lynch and Gallup.
The US index provider was shown not only to be the dominant provider in the region, but to have a market share of just over 70%. The survey questioned a panel of around 80 continental European fund managers on their activities in the equity markets, and one of the questions asked was who their current index provider was.
The Primark Extel 2000 survey of European investment profesionals found that MSCI was the preferred provider of pan-European indices for benchmarking and tracking purposes. Commenting on the survey among fund managers and institutions, Primark says “the evidence suggests that daylight is opening between MSCI and the competition”.
Those surveyed were asked to rank six choices of European equity indices for bench marking on a scale of 1 to 6. For benchmarking,the results were MSCI 5.3; national indices 4.0; FTSE World Europe 3.2; Dow Jones STOXX 3.0; FTSE Eurotop 2.7 and S&P Euro 1.2.
“Our long-term success is down to our almost 30 years of history as the premier international index provider,” says Rabbe Ekholm of MSCI. The group’s clients have been with the provider for a very long time, he says, and this fact reflects MSCI’s unique service offering – its building block approach to aggregating markets, combined with a reputation for accuracy, dependability and service, he says.
“We also earn the loyalty of our customers by continually upgrading and developing our product range to reflect the needs of the marketplace,” he says.
The most recent example of product innovation is the new global industry classification standard (GICS), which has been overwhelmingly adopted as the new standard in the marketplace, says Ekholm.
FTSE International and Dow Jones vied for second place in the survey. Between August 1998 and October 1999, FTSE took second place, but this position was assumed by Dow Jones after that, up to and including the most recent figures for May this year.
Michael Schanz, managing director of Stoxx, says the provider had noticed this change. He put the recent competitive success partly down to the fact that Stoxx indices are very transparent, with rules posted in great detail.
FTSE International is confident that the scale of MSCI’s lead will not last. The Merrill Lynch/Gallup survey had looked at numbers of fund managers using the benchmarks rather than amounts of funds under management attached to those indices.
Seen from this angle, and including the UK, FTSE would be on a par with MSCI with 40% market share each, says Peter de Graaf, European head of sales at FTSE. “We tend to work with larger funds.”
MSCI’s success was partly historical, he says. Although FTSE has a powerful position in the UK, it has only made an intensive push into Europe in the past few years.
o Former MSCI Europe principal Jane Staunton is to join rival FTSE International as chief operating officer of its North American subsidiary FTSE Americas. FTSE says Staunton will lead the company’s drive to convert plan sponsors to the new FTSE All-World index.
FTSE’s New York-based Americas office was established in January 1999.