Russell Investments and Interactive Data Introduce Fair Value Adjusted Index Information for Select Russell Global Indices
March 29 2010 - 9:00AM
Business Wire
Interactive Data Corporation (NYSE: IDC), a leading provider of
financial market data, analytics and related solutions, today
announced that its Pricing and Reference Data business will provide
its Fair Value Information Service (FVIS) for international
equities to Russell Investments for use in providing fair value
adjusted information on Russell’s global equity indices.
This information is designed to help investment professionals
effectively compare the performance of their international funds to
benchmark indices by incorporating information that approximates
the fund’s fair value procedures for international equity
securities. Russell’s fair value adjusted index data will be
available in a monthly report to clients of Russell Investments and
Interactive Data, as well as to the public via Russell Investments’
website.
An important component of fund performance measurement is the
concept of tracking error, which estimates the standard deviation
of the differences between a mutual fund’s returns versus those of
a comparable benchmark index. Generally, when comparing similar
funds with identical returns, a fund with a lower tracking error is
perceived to exhibit less risk. A research report by Interactive
Data (whitepaper #14) revealed that comparing the performance of
international mutual funds that employ fair valuation techniques
for international equity securities with benchmark indices that do
not include fair value adjustments can increase the fund’s
perceived tracking error, which can be misleading. By compiling
index data utilizing Interactive Data’s FVIS evaluations, Russell
can help investment professionals make a more ‘apples-to-apples’
comparison of performance to a given benchmark.
Russell will initially provide fair value adjusted index data
based on its equity indexes that reflect the following
comprehensive market segments: Global, Global Large Cap, Global
Small Cap, Global ex-U.S., Developed Large Cap, Developed ex-North
America Large Cap, Developed Europe, Asia Pacific, Asia Pacific
ex-Japan, Emerging Markets, Global ex-Frontier, and Global
ex-Frontier Large Cap.
“Our top priority is to provide clients and end investors with
the best possible measures of fund performance,” said Susie
Caswell, senior product manager for Russell Indexes at Russell
Investments. “By employing Interactive Data’s service on top of our
truly reflective and modular index construction, we’ll serve those
investment managers who use fair value adjusted pricing for their
international funds with another way to examine returns. As the
only index provider whose primary business is investment
management, we understand the importance of accurate analysis of
performance measurement.”
Caswell added that today’s announcement does not indicate a
change to Russell’s index methodology, but it does present a new
option for investment managers who would like to see the impact of
Interactive Data’s fair value factors on specific Russell
Indexes.
“We are very pleased to be working closely with Russell to
advance their objective of providing indices that help investment
managers accurately track fund performance,” said Liz Duggan,
managing director, Evaluations. “Interactive Data believes that the
mutual fund community can benefit from fair value adjusted
benchmark index data from Russell, as it offers more of an
‘apples-to-apples’ comparison for measuring fund performance. We
look forward to continuing to explore other applications for our
Fair Value Information Services that can help address challenges
faced by financial institutions.”
The result of extensive research and development, Interactive
Data’s Fair Value Information Services reflect decades of
leadership in providing mission-critical data to financial
institutions worldwide. Interactive Data’s Fair Value Information
Service is designed to provide information that can be used to
estimate a price for an exchange-traded international equity
security, equity index futures contract, or equity option that
would likely prevail in a liquid market, in view of market
information available at the time of evaluation. In January 2007,
Interactive Data was awarded a patent by the U.S. Patent &
Trademark Office for Fair-Value Pricing of a Financial Asset.
About Interactive Data Corporation
Interactive Data Corporation (NYSE: IDC) is a leading global
provider of financial market data, analytics and related solutions
to financial institutions, active traders and individual investors.
The Company's businesses supply real-time market data,
time-sensitive pricing, evaluations and reference data for millions
of securities traded around the world, including hard-to-value
instruments. Many of the world's best-known financial service and
software companies subscribe to the Company's services in support
of their trading, analysis, portfolio management and valuation
activities. Interactive Data, headquartered in Bedford, Mass., has
approximately 2,400 employees in offices located throughout North
America, Europe, Asia and Australia. Pearson plc (NYSE: PSO; LSE:
PSON), an international media company, whose businesses include the
Financial Times Group, Pearson Education, and the Penguin Group, is
Interactive Data Corporation's majority stockholder.
Interactive Data’s Pricing and Reference Data business provides
global securities pricing, evaluations and reference data designed
to support financial institutions’ and investment funds' pricing
activities, securities operations, research and portfolio
management. Interactive Data collects, edits, maintains and
delivers data on more than 6 million securities, including daily
evaluations for approximately 2.8 million fixed income and
international equity issues. Interactive Data specializes in
‘hard-to-get’ information and evaluates many ‘hard-to value’
instruments.
Pricing, evaluations and reference data are provided in the U.S.
through Interactive Data Pricing and Reference Data, Inc. and
internationally through Interactive Data (Europe) Ltd. and
Interactive Data (Australia) Pty Ltd.
For more information about Interactive Data Corporation and its
businesses, please visit www.interactivedata.com
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