ICE index arm attracts $60bn in debt, thematic funds

Intercontinental Exchange has reported strong growth in its index business, driven by demand for fixed income and sustainable exchange-traded funds.

The US exchange group said that some $60 billion (£44 billion) of fixed income and equity exchange-traded funds switched to ICE indices in the first half of 2021.

The growth in the ICE index arm was linked partly to a spike in demand for US fixed income ETFs, a market that increased to $969 billion at the end of last year from $186 billion at the start of 2020, according to ICE.

ICE said its index arm, part of the Fixed Income and Data Services business run by Lynn Martin, also benefited from increased demand for thematic investing in areas such as sustainable energy and electric vehicles.

Martin said: “The accelerating adoption and growth of passive investing has been an important driver of organic growth for our index business.”

She added: “But even more critical has been the efforts we’ve made to dramatically increase the breadth of our offering and the flexibility we’ve introduced into our approach to index construction and risk management. This has resulted in the launch of several new ETFs benchmarked to our indices, as well as transitions of many existing ETFs to ICE indices, and demonstrates the end-to-end value proposition we provide to our customers.”

The exchange said ICE Data Indices has seen double-digit annual revenue growth since the acquisition of the ICE BofA suite of indices in 2017. Over $300 billion of ETF assets are currently linked to ICE indices compared to less than $100 billion when ICE acquired the business.

ICE also said in a statement on Wednesday a further $36 billion in planned transitions are due to take place before the end of the year

Phil Galdi, Vice President of Corporate Development at ICE Data Services, added: “Like core fixed income and equity ETFs, ESG and thematic funds present interesting investment opportunities, and are an area where we’ve been able to apply our index construction methodologies with the greatest result.”