S&P Capital IQ Introduces New ETF Style Classification System
Over 2,500 North American ETFs and ETNs classified
New York, September 23, 2013 -Building on its success as the developer of the GICs industry classification structure, S&P Capital IQ has introduced a new system called Exchanged Traded Funds (ETF) Style Classifications. This comprehensive classification system classifies ETFs and ETNs with over 40 standardized descriptive characteristics to reveal the true exposure being provided by over 2,500 North American ETFs and ETNs.
"ETFs are fast growing investment vehicles and the market is finding it difficult to classify them," said Rui Carvalho, Managing Director of Product and Content at S&P Capital IQ. "They want supporting information that provides a complete, accurate, and objective profile of the exposures of ETFs. In addition to portfolio exposure and classification, institutions and other investors will also use the system for ETF selection and reporting purposes."
The first level of classification in the S&P Capital IQ system defines the asset class such as equity, fixed income, commodity, currency, real estate, and multi-asset. The next three levels further refine an asset class into very specific market segments exposure being provided by the ETF. For example, commodities would be refined to metals, precious metals, and gold. In addition, the system captures and provides multiple other dimensions and characteristics such as geographic emphasis, tax efficiency, expense ratio, long/short exposure, leverage ratio, sector emphasis, investing style, and target risk.
The ETF classifications will be seamlessly integrated in S&P Capital IQ's Xpressfeed and will be available for use with all of the information in Xpressfeed, including S&P Capital IQ Premium Fundamentals, Compustat Fundamentals, S&P Credit Ratings, Earnings Estimates, and other classifications such as GICS, S&P Capital IQ Private Company Industry Classifications, and regional classification schemas like ANZSIC.
To illustrate the issues facing investors, we can observe the vast difference in the risk/return profiles of seemingly similar Gold ETFs. The following chart illustrates the latter point.
Source: S&P Capital IQ. Pricing data is as of 09/19/2013.
IAU and GLD both invest in physical gold while GDX invests in equities of gold mining companies. DGP, on the other hand, does not have a direct investment in gold or gold companies but instead as the objective of providing a 2X leveraged performance on an index performance and is an ETN which introduces additional counterparty risk considerations. "Investors seeking an exposure to gold would need to understand these critical differences in order to select the appropriate investment vehicle" said David Coluccio, Vice President of Product and Content at S&P Capital IQ.
Mr. Coluccio added that S&P Capital IQ will conduct annual reviews to add new categories as needed.
ETF Style Classifications data is available through S&P Capital IQ's Xpressfeed delivery platform. Xpressfeed provides buy-side and sell-side professionals a turnkey database with loading and maintenance technology for reliable, efficient data delivery and management. Xpressfeed delivers a comprehensive data suite via FTP in conjunction with the Xpressfeed Loader, a tool that automatically downloads files from an FTP site and processes them into a relational data warehouse. Users have the flexibility to choose from a variety of content packages. These packages can be used alongside any dataset currently available in Xpressfeed.
About S&P Capital IQ
S&P Capital IQ, a part of McGraw Hill Financial (NYSE:MHFI), is a leading provider of multi-asset class and real time data, research and analytics to institutional investors, investment and commercial banks, investment advisors and wealth managers, corporations and universities around the world. Evaluated pricing is prepared Standard & Poor's Securities Evaluations, Inc., a part of S&P Capital IQ and a registered investment adviser with the U.S. Securities & Exchange Commission. S&P Capital IQ provides a broad suite of capabilities designed to help track performance, generate alpha, and identify new trading and investment ideas, and perform risk analysis and mitigation strategies. Through leading desktop solutions such as the S&P Capital IQ, Global Credit Portal and MarketScope Advisor desktops; enterprise solutions such as S&P Capital IQ Valuations; and research offerings, including Leveraged Commentary & Data, Global Markets Intelligence, and company and funds research, S&P Capital IQ sharpens financial intelligence into the wisdom today's investors need. For more information visit: www.spcapitaliq.com.
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