Recommend Indices with Confidence
Finding the right indices or index-linked products for you or your clients can be a daunting task. There are millions of indices in all shapes and sizes, but not all of them are worth buying. Many have a short-lived track record; some are over-engineered; some contain significant over-exposures, and some may have hidden fees.
The Index Standard helps financial professionals make informed decisions with our objective ratings, which show investors how an index operates and help them identify its key strengths and weaknesses via critical metrics.
The Index Standard® has no affiliation with any index providers, and we don’t provide buy, hold, or sell signals. Instead, we offer our independent, unbiased expert opinion to help you directly compare different indices, ETFs and annuities, holding them all to the same standard.
Objective Measurements of Index Quality
We rate indices as Platinum, Gold, Silver, Copper, Neutral, and Watch depending on their characteristics relative to their peers. The rating is meant to signify the quality of build of an index, but that is not to say a Platinum index will have good performance, nor that a Watch index could not still have high returns.
ETF & Index Ratings
The Index Standard® evaluates each index against the most appropriate benchmark, and all indices are evaluated at the same time to ensure consistency and fairness. To assign a rating, we first score each index based on over 30 qualitative and quantitative metrics using a purely algorithmic process that eliminates any potential bias.
Once a raw score is calculated, we rank each index within its peer group by assigning the highest-scoring indices a Platinum rating, then in descending order from Gold to Watch. All indices are evaluated in terms of seven categories which we deem critical to index construction:
-
Transparency
Explore the “small print” such as independence, rules transparency and hidden fees; also the index’s adherence to IOSCO principles.
-
Robustness
Analyze diversification, index parameters and tradability in stressed markets.
-
Risk
Examine an extensive array of risk metrics to determine how risky the index is.
-
Efficiency
Determine the index’s ability to balance off risk and return attributes.
-
Returns
The index is analyzed through metrics such as annualized returns, skew, and kurtosis to assess the stability of returns.
-
Attractiveness
Quantify the current level of attractiveness and the future potential.
-
Capital at Risk
Examine value at risk and drawdowns to identify potential unknown risks that may hinder performance.
The Index Standard® evaluates each index against the most appropriate benchmark, and all indices are evaluated at the same time to ensure consistency and fairness. To assign a rating, we first score each index based on over 30 qualitative and quantitative metrics using a purely algorithmic process that eliminates any potential bias.
Once a raw score is calculated, we rank each index within its peer group by assigning the highest-scoring indices a Platinum rating, then in descending order from Gold to Watch. All indices are evaluated in terms of seven categories which we deem critical to index construction: