Strategy Data Exchange (SDX), a data platform that hosts investment manager strategies, has inked an agreement with S&P Dow Jones Indices to add the latter's smart beta strategies to its library.
S&P Dow Jones has started to host information about its benchmark indices on SDX's platform, which was launched by California-based SoHo Capital in 2016.
The indices are particularly strategies that passively track a basket of securities.
Consequently, product issuers on SDX can build their own investment vehicles based on these indices for a licensing fee negotiated with S&P Dow Jones.
Frank Troise, managing partner and chief executive of SoHo Capital said the platform is seeing significant demand for alternative risk premia, an investment approach similar to smart beta that employs long/short strategies, from product issuers.
‘One of the areas we see smart beta getting traction is in Asia small cap stocks. Asia looks cheap and Asia small cap looks very cheap,’ he told Citywire Asia.
The first strategy to go live on the platform is the S&P MARC (Multi-Asset Risk Control) 5% Excess Return Index.
The index tracks three underlying S&P indices for equities, commodities and fixed income, and has returned -3.89% so far this year. It returned 10.71% in 2017.
The indices are calculated using a risk-weighted approach that utilizes a maximum leverage of 150% and a 5% volatility target.
SDX offers over 2,100 strategies from global asset managers and hedge funds that currently don’t exist as commingled vehicles or funds.
SDX’s distribution base, which includes investment banks and private banks in Europe and Asia, then create products by putting wrappers around strategies. The products can include unit trusts, discretionary portfolios and actively managed certificates.
For example, UBS signed an agreement with SDX last October to access the separately managed account strategies in its library.
The Swiss lender manufactures actively managed certificates based on these strategies, distributing them to private banks and external asset managers via its trading platform called NEO.