C8 features in article: ‘Spotify investing’ threatens asset managers

This flexibility means [Direct Indexing] is the "next step" for investors, says Mattias Eriksson, founder and chief executive officer of C8 Technologies, a direct index solution provider.  "No one buys ready-mixed music CDs anymore when you have personalised playlists on Spotify [a music streaming service]. Probably we will see the same level of personalisation in the asset management industry," says Mr Eriksson.
BY JON WEBB

‘Spotify investing’ threatens asset managers  – Ignite Europe – 20 July 2022

Excerpt:   Personalisation is potentially direct indexing’s strongest selling point, with clients starting with an initial index and then adding other indexes, or adding or removing individual stocks, based on their preferences.

This flexibility means it is the “next step” for investors, says Mattias Eriksson, founder and chief executive officer of C8 Technologies, a direct index solution provider.  “No one buys ready-mixed music CDs anymore when you have personalised playlists on Spotify [a music streaming service]. Probably we will see the same level of personalisation in the asset management industry,” says Mr Eriksson.

The ability for clients to tailor their portfolios means it will benefit from growing demand for investments that consider ESG considerations, experts say.

Mr Eriksson says European institutional investors are already taking advantage of this aspect. He gives the example of a pension fund that has its own ESG rules, which it can apply on top of an index in which it invests.  He says that direct indexing is not restricted to equity investing, adding to its appeal among European institutions and family offices. Over the past six months, there has also been “a lot” of interest in alternative investment strategies, such as those using futures contracts, Mr Eriksson says.

Meanwhile C8 is looking to expand the take-up of its services among wealth managers, which would increase the use of direct indexing with retail clients.

Other posts

Thoughts From the Divide: Attribution

BY JON WEBB
In April of last year, Huw Pill caught flack for saying that Brits “need to accept that they’re worse off”. This was followed by John Authers coming to the defense of the pilloried BoE chief economist. As we wrote, Authers noted that the comments were taken out of context and explained that the BoE’s Chief Economist was describing how “after a few external shocks, inflation becomes a collective action problem” where “ideally everyone would take a share of the hit, and then they can move on. Human nature isn’t like that, and as a result, economics isn’t like that”. Now, roughly a year later, the BoE’s Catherine Mann has picked up Mr. Authers’ baton. It turns out that people who can maintain their standard of living will tend to do just that! Bemoaning the “challenge” of bringing inflation back to target, Mann said there was “a lack of consumer discipline” to rein in businesses’ pricing power, Read more →

Thoughts From The Divide: Regrets

BY JON WEBB
With the Fed in blackout, the market has been left to its own devices to digest this week’s onslaught of economic data. The inflation data was particularly indigestible. CPI numbers came in hotter than expectations, with both Core and Headline higher than forecasts on a YoY basis at 3.8% and 3.2%, respectively: only slightly worse than expected, but worse than expected. The market also had to deal with PPI that was substantially hotter than expected: the month on month came in at 0.6%, double the consensus forecast. Under the surface, goods inflation appeared to once again be rearing its head, accounting for “about two-thirds of the rise in the headline PPI”, courtesy of “a 1.2% surge in goods prices, the biggest increase since August 2023”. (The Houthis are not helping). While the Fed may have taken a temporary vow of silence, Yellen is under no such constraint. Speaking in an interview on Fox, the Treasury secretary said, “I regret saying it, [inflation,] was transitory”, following up with the jab that “I think transitory means a few weeks or months to most people” (how long is a piece of string? To be fair, predicting inflation is, apparently, tricky: “there are clear limitations to how far into the future we can forecast inflation”). Read more →

January 18: This Week’s Thematic Reads

BY TEMATICA
If you missed out on this week's signals, we've got you covered Read more →
Back to all posts →