Welcome to FinTech TV.
I'm Remy Blair.
The passive revolution has moved from the fringes of the 70s to the center of global capital markets, now commanding trillions in AUM as the S&P 500 hit record concentration levels and the beta trade becomes commoditized, the industry is at a crossroads.
S&P Global and Vanguard are presenting its joint research, the future of capital markets here at the New York Stock Exchange.
And now we are joined by Tim Edwards, global head of index investment strategy and managing director of S&P Dow Jones indices.
Great to have you here.
Thank you so much for joining me.
My pleasure.
Thanks for having me.
Well, here we are as we kick off 2026, and this is the time of year that we're looking ahead.
So what would you say is the single biggest structural shift that you're forecasting, not just this year, but in the next decade?
It's, it's very early days, but I think one of the key, uh, questions that people have been asking themselves is when and if there will be a rotation in US equity market strength beyond that traditional.
Superhero set, call it, you know, Magnificent Seven or Top 10 or whichever, you know, categorization you want to take, for 10 years, we've had leadership from the very largest companies, uh, in the US.
It's very early days, but so far in 2026, we've seen what many people have been calling for, which is a rotation to, Uh, increased breadth, uh, so better performance from, for example, the S&P 500 equal weight index, uh, or from small caps or from mid-caps, and I think that dynamic is someone, is one that's very top of mind at the moment, connects to a lot of major trends, uh, and it's something that we're watching very closely.
And of course we're here on the trading floor of the New York Stock Exchange and we're continuing to monitor what's happening with the major stock averages, the indexes here, and II Singh has spent about 5 decades driving feeds towards zero.
So tell us what you Expect to see not just in the short term, but also the long term as well.
Yeah, that's right.
The uh the occasion for our event today is we we're coming up on the 50 year anniversary of the first ever index fund, tracking the S&P 500 created by Vanguard and and particularly by, by.
Your viewers may know the name Jack Bogle, uh and it's great to be celebrating that, but you know, it took a really long time for these index funds to actually get any assets.
Uh, nowadays they are a significant way in which, uh, investors around the world, but especially individual investors through ETFs are able to access investment returns, whole markets, sectors, different pieces of the pie.
Um, the story of indexing for the past 1015 years has been one of significant growth, and that has been to the benefit of investors.
Just to give you, you know, one statistic that we use sometimes, um.
Compared to traditional actively managed mutual funds, the S&P series of US equity indices has been helping investors to save $52 billion a year in fees.
That's a lot of money going back into investors' pockets, and I think we can, something we can all celebrate.
And speaking of which, you're here at the New York Stock Exchange for this event in conjunction with Vanguard.
So tell us about the move of benefits beyond beta, and what does this mean?
So I think there there is an evolution in indexing that's gone beyond, you know, just core popular indices like the S&P 500.
So now there is a really wide range of, of different tools uh that investors can use.
And there are questions about, you know, where else will indexing become an important part of.
Markets.
So I could say, you know, the bond markets is one piece of it.
There's also a lot of interest, research being done by our organizations around and others around spaces like crypto, uh, different tokens, um, and also private markets, so private credit, private equity is a space where currently there isn't the same.
Same level of sort of transparency and benchmarking that we're used to in the equities world.
There's a lot of effort to ask ourselves the question, how can we bring greater transparency to that space?
Um, so that's what we're talking about upstairs.
It's early days for some of those themes, but a lot of exciting innovation and development, um, expected over the next couple of years.
And speaking of innovations, what comes next when it comes to dynamic benchmarks, and what can investors actually expect from indexes?
Well, I think, look, uh, it's worth pointing out that the traditional indices that we, if you like, we know and love, they're still doing their job, and they're doing it rather well.
And if you want a shorthand for, you know, how did everyone do today.
Looking at how the S&P 500 did, in just one statistic tells you overall how did the US equity markets do, and they will keep doing their jobs.
I think what is increasingly happening is you also have more tools, more liquid, efficient, transparent tools to take control of different exposures, including large stocks versus small stocks, different sectors, different industries, even.
Different factors like growth and value or momentum are being made available to market participants as index-based tools that they can take positions in, manage risk, or express a view.
I think that's been one of the really interesting trends in indexing in the past couple of years and one that I think is really well set to continue, at least for the next couple of years.
Yeah, and finally, before I let you go, Tim, at the top of the interview, you mentioned Market rotation and given the different types of indices that are out there, it helps the retail investor as well as people who are in the marketplace get an idea of what's happening below the surface.
So what are you seeing the most demand and what does this mean for the lineup moving forward?
Yeah, it's, it's, it's really interesting the way that people are managing risk is changing.
If I go, you know, long term horizon.
5, 10 years ago, it was all about risk on or or risk off.
That is not the way the market is working right now.
Uh, it's, there's far more differentiation, much more dispersion, winners and losers each day rather than everything up, everything down.
Um, and taking advantage of those opportunity sets or managing risks in this environment looks different.
It's not just about in or out of the market, it's about which parts of the market did you wanna be in.
I think that there's a lot of different interesting ways to engage.
I would highlight, and we're seeing this in our data, the use of, of a sector perspective, sectors and industries is increasingly one that we're finding resonate, and we're seeing ways in which people.
Playing, for example, technology versus energy.
You know, people who, who, who benefit from a high price of oil and people who, who are hurt by a high price of oil.
These are different dynamics that are fighting for the market's attention right now, uh, but also an opportunity to express a view, uh, in an index-based way.
Well, Tim, it was wonderful having you here.
Join us on FinTech TV.
Thank you so much for your time and thank you so much for sharing all of your insights.
Thanks for having me.
My pleasure.
