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FTSE Russell revises its private investor indexes


FTSE Russell, one of the leading providers of stock market indexes globally, has made some changes to its Private Investor Index Series, which have been implemented this week. Indexes are very important tools for wealth managers and private client stock brokers, because they provide an independently calculated benchmark against which the performance of a private portfolio manager can be measured.

FTSE Russell Private Investor Index Series

FTSE Russell said that the changes were being made “in response to private investor/wealth management industry trends and client feedback.” The number of indexes within the series is being expanded to seven with the Ultra Conservative Index and an Ultra Growth Index. The Ultra Conservative Index will reflect allocations to eligible fixed income funds while the Ultra Growth Index will be focused on equity funds.

FTSE Russell also said that going forward the asset allocation models and definitions of the indexes would be determined using data from Morningstar’s Direct Fund Database rather than peer group surveys. The asset classes covered by the indexes will also be expanded to cover global equities, sterling corporate bonds, global bonds, and global ex-UK bonds. All other asset classes are being retained, with the exception of the hedge fund category, represented by the FTSE Custom Hedge Fund Index, which will be replaced by an ‘Other Investments’ category.

The Morningstar Fund Database contains asset allocation information for a broad set of asset allocation funds, equity funds and fixed income funds that are authorised for sale to UK investors.

“The range and depths of that database allows us to derive asset allocation levels that are statistically robust, and also reflective and representative of the broader UK fund management industry,” FTSE Russell said in a statement this week.

The seven indices that are now being calculated are:

  • FTSE UK Private Investor Ultra Conservative Index
  • FTSE UK Private Investor Conservative Index
  • FTSE UK Private Investor Income Index
  • FTSE UK Private Investor Balanced Index
  • FTSE UK Private Investor Growth Index
  • FTSE UK Private Investor Ultra Growth Index
  • FTSE UK Private Investor Global Growth Index

The actual asset types will be represented by other FTSE indexes. For example, global equities performance will be tracked by the FTSE All-World Index. FTSE Russell said that part of the rationale for the changes was a reflection of changing consumer and market trends, but that it also wanted a much higher degree of transparency in the way the asset allocation models were being formulated.

For private investors, the independently calculated indexes represent a great way to track the performance of wealth managers tasked with managing your money across a range of funds which they select for you, including as part of a SIPP product.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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