Nasdaq’s Investment Intelligence Unit Eyes Expansion
Nasdaq’s Investment Intelligence business expects to benefit from the growth in retail trading, passive investing and the demand for new indexes, providing more private markets and environmental, social and governance (ESG) data and expanding geographically.
The Investment Intelligence unit includes data, indexes and analytics for a variety of markets, asset classes and across a range of users from retail traders to institutions and asset owners.
Oliver Albers, EVP and head of Investment Intelligence at Nasdaq, told Markets Media that there is a huge opportunity for the index business as Nasdaq continues to see growth in passive investing around the globe.
“Geographic expansion is a key initiative across the entire business,” he said. “There are shifts in demographics across Asia Pacific and Latin America, and more investors with disposable income looking to access US capital markets after their home market.”
There also continues to be demand from asset owners and asset managers to use technology to improve workflow and processes, due to increasing cost pressures.
In March this year Albers was named executive vice president, head of Investment Intelligence, replacing Lauren Dillard who left to take an executive role at a private equity firm. He has been at Nasdaq for 22 years and was previously senior vice president, global head of data for Investment Intelligence.
Albers does not expect the growth in passive investing to slow down. He said: “Some of the demand we are hearing at this point involves ESG, and also thematic indexes such as electric vehicles, and income-generating strategies.”
Nasdaq has also developed a range of ESG-focused technologies and solutions over the last decade including ESG advisory services for investor relations professionals; Puro.Earth, a carbon marketplace and Nasdaq OneReport, an ESG workflow and reporting platform.
In June this year Nasdaq announced the acquisition of Metrio, a provider of ESG data collection, analytics and reporting services. The Canadian firm is being integrated as a software as a service (SaaS) platform into Nasdaq’s suite of ESG solutions.
Michael Bartels, senior vice president, IR & ESG Services at Nasdaq, said in a statement: “We expect current and prospective clients to benefit from a flexible platform that collects, measures and analyzes corporate sustainability data, as well as generates investor-grade reports in real-time, which can be adapted for and shared with multiple stakeholders.”
Albers described Metrio as helping corporates to manage their ESG workflows by making it easier for them to gather internal information that is required to report on ESG metrics as well as reporting to investors.
“What is interesting about Nasdaq is that we are one of the few participants that really connects corporates to the investment management ecosystem as well as the retail ecosystem,” he added.
Most of the demand over the past few years has been related to increased retail activity with tens of millions of new investors entering the market during the pandemic, according to Albers.
“Although some retail activity has trailed off, it is still at elevated levels,” he added. “We are working with a lot of our partners on investor education.”
When Albers started at Nasdaq it could take up to 90 days to code a data feed and get it working for a client. He contrasted this to now being able to get an API working for an investor in a couple of hours.
“What really excites us about the cloud is being able to bring data to where clients want to consume it,” he added.
Nasdaq Data Link was launched in September last year to allow users to search and access more than 250 datasets from both Nasdaq and third-party providers. Quandl, acquired by Nasdaq in 2018, provided the infrastructure to give customers such as institutional investors, retail brokerages, fintech apps, media and academics access to data in a simple manner via cloud APIs.
Albers said: “We actually increased our client engagement during the pandemic as investors wanted new insights, in terms of air travel, supply chains and today investors are struggling with understanding inflation and geopolitical risk.”
In addition there is demand for increased exposure to private markets, for which Nasdaq is spending time structuring large amounts of unstructured data.
Nasdaq reported that Investment Intelligence had 12% organic year-on-year revenue growth for the first quarter of this year.
Market data revenues went up primarily due to an increase in proprietary data revenues driven by higher international demand.
Index revenues increased primarily due to higher assets under management in exchange traded products linked to Nasdaq indexes and revenues related to futures trading linked to the Nasdaq-100® Index. Assets under management in ETPs benchmarked to Nasdaq’s indexes rose 4%.
Analytics revenues increased 13% primarily due to growth in the eVestment platform driven by new sales and strong retention. Nasdaq acquired eVestment, a content and analytics provider used by asset managers, investment consultants and asset owners to help facilitate institutional investment decisions in 2017 to broaden its reach into the buy side.