Nasdaq to acquire smart beta index provider Dorsey, Wright & Associates LLC
06 Jan 2015
Nasdaq yesterday said it is acquiring, Dorsey, Wright & Associates LLC, an independent registered advisory firm in Richmond, Virginia, a smart beta index provider.
It expects to close the transaction during the first quarter of this year.
DWA, which provides data analytics, passive indexing and smart-beta strategies, would add to Nasdaq's index portfolio, bringing model-based strategies and analysis to support the financial advisor community, according to Nasdaq.
According to Nasdaq, DWA would boost its capacity for growth in the index business across asset classes and geographies, bringing together DWA's 17 ETFs and Nasdaq's 69 licensed smart-beta ETFs focused primarily on dividend and income strategies.
Nasdaq would then have nearly $45 billion in assets benchmarked to its family of smart-beta indexes and over $105 billion benchmarked to all Nasdaq indexes.
According to Adena Friedman, Nasdaq president, Nasdaq's index business had been a strong growth area for over the last decade, and the acquisition of Dorsey Wright & Associates would further cement the company's position as a major player and industry innovator.
Nasdaq would acquire DWA for $225 million funded through a mix of debt and cash on hand.
Nasdaq, one of the top builders of the indexes backing ETFs, said Monday it would acquire an investment advisory firm that specialising in souped-up ''smart beta'' benchmarks.
Meanwhile, The Nasdaq OMX Group Inc's $225 million cash-and-debt deal for Dorsey Wright & Associates, comes with increasing competition in more exotic corners of the ETF business, reported.
It also accelerated consolidation in the business of selling investment data to financial advisers and other investment firms, and follows the acquisition last month of Russell Investments by FTSE owner London Stock Exchange Group PLC.
Dorsey Wright, which licenses indexes used by 17 ETFs and had $6 billion of assets under management in its licensed products, is among US firms that had profited from a new wave of demand for exotic ETF strategies used by financial advisers. It counts among its customers the growing suite of smart beta funds offered by PowerShares, a unit of the fund manager Invesco, and First Trust Advisors.
Providers of smart beta indexes had in recent years been boosted by adviser interest and a marketing push by fund providers seeking to compete with conventional index funds, which remain dominant.