Last Updated: 25 September 2023
Financial market index provider Structured Solutions has re-branded its entire business as “Solactive”. The new moniker, which has been the name of its index brand since 2010, is effective from today.
Founded in 2007 as Structured Solutions in Frankfurt, Germany, Solactive develops, calculates and markets its own indices and also acts as a calculator for third party indices. Distinguishing itself from other providers with its customised index segments, it now calculates more than 800 indices, 24-hours a day, for 75 clients in Europe, America and Asia.
While its focus has been in the US for the last four years, (it now ranks fourth by the number of exchange traded funds on indexes it calculates), it is now looking to Europe and has ambitions to be the single point of contact for anyone in any asset class.
Rebecca Hampson, IU.eu’s European Editor, talks to Steffen Scheuble, Solactive’s chief executive officer.
IU.eu: Why have you re-branded?
Steffen Scheuble: The re-branding is largely to make us one unit, but also because the ‘structured’ label does not really reflect our business focus anymore and having one name will also make life easier. Less administration is always a good thing.
In the US, we now have nearly seven percent market share in terms of index calculators and sit ahead of Nasdaq in terms of the number of ETFs where we calculate the underlying index.
IU.eu: You are Germany-based, but why did you start in the US?
Scheuble: We looked at the US first because the market development is more advanced than in the rest of the world. By that I mean that over the last few years, people have been looking beyond the big benchmarks and this is where we have real expertise. People can see us more and more and this has helped us rank fourth in the US.
IU.eu: What has been behind your success?
Scheuble: Our niche lies in three areas: Costs, quality and flexibility.
We have a very aggressive pricing model. There are – at best – 20 brand names in the indexing market and all of them are becoming more and more cost-focused since many clients do not accept uncapped variable or high fixed fees anymore. So everything from number 21 onwards doesn’t compete or can’t compete on this scale. The pure ability to do index calculation is a commodity in itself. This is essentially IT that you have to offer for a commodity price.
Secondly, the first point about costs does not work if the quality is not sufficient. I think the fact that numerous clients have handed over the calculation of entire index suites to us shows that we can definitely compete with the established brand names in this regard.”
Thirdly we offer a lot of flexibility. We are able to do this because we are a small organization and we have a very efficient IT system, which allows us to implement new concepts very quickly.
If a client comes to us with a straightforward equity index to calculate, we will sometimes give them a price right on the phone. The index will then be live within a few hours if necessary.
IU.eu: You take a multi-asset class view, is this unique?
Scheuble: We offer a calculation service for all asset classes on a customised basis, whereas most providers usually focus on a certain group of underlyings. This approach means we are not stuck to, fixed income, or commodities, or just equities. We are able to offer all of these and others, including option indices and smart beta strategies.
We have the capabilities to calculate almost every asset class so we take a multi-asset view and there are hardly any providers that do that, e.g. MSCI does equities, S&P largely does equities and a bit of commodities, Markit does bond indices. We want to be the single point of contact for anyone in any asset class.
IU.eu: Are you looking to build out your presence in Europe?
Scheuble: In the US we are now doing smart beta regularly, but in Europe we are just getting the ball rolling. For example, we calculate the Société Générale Quality Income Index which runs a sophisticated dividend focused investment strategy.
In Europe we also calculate indices used by UBS (commodity mining ETFs linked to Solactive), BNP Paribas and Deutsche Bank. There are currently three more European ETFs in the immediate pipeline with one from one of the main providers and more ongoing.
In Europe, we have only seen this uptick in the last 18 months. Ultimately, we see no need in Europe for there to be 15 ETFs on the same index and we think that we have the abilities to calculate indices for ETFs in order to fix this problem.
We are not as present on the buy-side as we would like to be, but this is a good place to be working from, it means we have real scope to grow.
IU.eu: How are you going to build on this?
Scheuble: There are two ways we can build our footprint. We can take a purely wait and see style attitude and rely on gains from the ETF market growth– but this means that we wait until the market goes to the second level.
Or we use our multi asset class view.
IU.eu: Are there any other plans?
Scheuble: Asia is now on the cards, but it might take a couple of years until we reach the stage where clients are looking beyond well-branded market access products.