Fintech expert Alexander Berg has launched a firm that is looking to disrupt the index provider space.
Index One is a platform for index development, calculation and distribution that enables asset managers to create bespoke indices.
Once created, the indices and benchmarks will be independently calculated by Index One in order to avoid any conflicts of interest.
This calculation will be done at a fraction of the cost compared to the index providers which have come under pressure in recent times for their high licensing fees.
At this point, the firm has mainly been talking to active fund managers, who want to have a benchmark that is cheaper and more relevant.
Founder Berg (pictured) sees the firm positioning itself in the middle ground between index providers and self-indexing.
Issues relating to the suitability of certain benchmarks and index providers’ high licensing fees were the two reasons why Berg launched the business earlier this year.
Berg added these were two problems he noticed with the asset management industry which had the potential to be disrupted.
“We have created versions of the popular indices such as the S&P 500 in order to prove they are easy to calculate,” he continued. “The performance has been identical.”
Furthermore, he highlighted how the industry has historically had a high barrier to entry due to the huge amount of data coverage and computational power required, however, both these factors have been eroded with the growing use of cloud computing and data aggregators.
“Indexing is the only area of the asset management industry where prices have not come down so appetite should be high for cheaper solutions.”