Blog Posts — April 13, 2022

Eurex introduces first futures on thematic indices

Eurex, one of the world’s leading derivatives exchanges, is entering a new segment with the introduction of futures on STOXX global thematic indices. 

The four contracts will start trading in the first half of 2022 and will track indices from the STOXX Thematics suite, designed to target the beneficiaries of long-term structural trends transforming our modern economies and societies: 

STOXX® Global Automation & Robotics

STOXX® Global Breakthrough Healthcare

STOXX® Global Digitalisation

STOXX® Global Digital Security

Record inflows

Thematic investing continues to capture investors’ imagination as a way to allocate capital in strong economic forces and away from traditional sector and cyclical approaches. Over 2020 and 2021, assets under management in thematic funds worldwide more than tripled to USD 806 billion, according to Morningstar, following record-breaking inflows. 

For thematic investors, the availability of futures adds an instrument to gain, manage and hedge portfolio exposures with the advantages of a liquid and centrally-cleared market. The contracts will specifically complement and support trading of existing ETFs tracking the four indices, as well as facilitate a natural progression for traders of sector derivatives, according to Sean Smith, Head of Global Derivatives Licensing at Qontigo. Eurex is Europe’s largest exchange in sector-focused derivatives turnover. 

“There is strong client demand to evolve from sectors to thematics, as has been proven on the ETF side,” said Smith. “As the thematics ecosystem continues to grow, there is a need for larger notional-value products for investing and transferring risk, a need that will be solved with thematic index futures.”  

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Global coverage

The four thematic indices, which date back to 2016, track global, disruptive concepts that were chosen for their long-term and above-average growth potential. While the selection of themes is based on a predictive assessment of future demand, their underlying drivers are well established in the present. We have covered on this blog the powerful dynamics behind each individual theme: automation and roboticsdigitalizationdigital security and healthcare innovation.

All thematic concepts have outperformed the STOXX® Global 1800 benchmark in the seven years ending in 2021 (Figure 1).

Figure 1: 7-year return of STOXX thematic indices

Source: Qontigo. 7-year net returns in dollars to Dec. 31, 2021. Normalized at 100 on Dec. 31, 2014.

 

The indices already underlie ETFs with more than USD 7.6 billion1 in assets and managed by BlackRock, proof that the methodology has been tested and embraced by the market.

Methodology

Companies that derive at least 50% of their revenues from businesses that fall under the theme in question are selected into each index. The revenue-based analysis relies on FactSet’s Revere industry hierarchy, the world’s most comprehensive business classification, whose granular taxonomy allows for an accurate examination of companies.  

The indices are weighted according to constituents’ adjusted equal weights, providing diversification from the allocation of market-capitalization-weighted indices. Liquidity and size screens are applied, aiming to have a minimum number of 80 components. The indices also incorporate ESG exclusionary screens2 that meet the standard sustainability criteria of investors.

For a deeper look into the thematic indices’ methodologies and constitution, visit a dedicated Qontigo whitepaper

“The STOXX thematic indices follow an objective, rules-based and clear methodology that makes them investable and suitable as underlying for all kinds of investment products,” said Smith. “This, and the compelling proposition of thematic investing, have made the indices very popular. We are excited to build up on partnerships to bring in new solutions in this segment, reaching a wider client base and helping them access innovative investment approaches.”

Latest data available per fund as of week ending April 8, 2022.
The exclusions cover global norms, controversial weapons, weapons, tobacco, nuclear power, thermal coal, oil & gas, and companies involved in severe ESG controversies.


Qontigo is a leading global provider of innovative index, analytics and risk solutions that optimize investment impact. As the shift toward sustainable investing accelerates, Qontigo enables its clients—financial-products issuers, asset owners and asset managers—to deliver sophisticated and targeted solutions at scale to meet the increasingly demanding and unique sustainability goals of investors worldwide.

Qontigo’s solutions are enhanced by both our collaborative, customer-centric culture, which allows us to create tailored solutions for our clients, and our open architecture and modern technology that efficiently integrate with our clients’ processes.

Part of the Deutsche Börse Group, Qontigo was created in 2019 through the combination of Axioma, DAX and STOXX. Headquartered in Eschborn, Germany, Qontigo’s global presence includes offices in New York, London, Zug and Hong Kong.