Index providers: Whales behind the scenes of ETFs

• 成果类型: Article
• 署名作者: An, Yu; Benetton, Matteo; Song, Yang
• 署名单位: Johns Hopkins University; University of California System; University of California Berkeley; University of Washington; University of Washington Seattle
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.06.003
• 发表日期: 2023
• 页码: 407-433
• 关键词: ETF; Index provider; Licensing fee; Expense ratio; COMPETITION

摘要

Most ETFs replicate indexes licensed by index providers. We show that index providers wield strong market power and charge large markups to ETFs that are passed on to in-vestors. We document three stylized facts: (i) the index provider market is highly con-centrated; (ii ) investors care about the identities of index providers, although they explain little variation in ETF returns; and (iii ) over one-third of ETF expense ratios are paid as licensing fees to index providers. A structural decomposition attributes 60% of licensing fees to index providers' markups. Counterfactual analyses show that improving competi-tion among index providers reduces ETF expense ratios by up to 30%.