S&P Capital IQ is getting into the subadvisory business in a big way, targeting independent advisors who seek help in building model portfolios.
The McGraw-Hill Cos. business line, which provides research and analytics to investment advisors, wealth managers and institutional investors, announced Monday that it has launched a new group, Global Markets Intelligence. GMI combines three of S&P Capital IQ’s businesses—U.S. investment advisory, U.S. risk strategies research and U.K. fund review—into a single entity that can act as a sub-advisor in providing model portfolios to advisors.
This little-known business has quietly amassed over $18 billion under advisement for institutional investors.
Michael Thompson, GMI’s managing director and head, told AdvisorOne in an interview on Monday that the three smaller businesses were profitable but somewhat overlooked because they were operating separately. However, the dramatic growth of independent advisors in recent years has resulted in increased demand for S&P Capital IQ to provide its services as a subadvisor, Thompson said.
“People knew those businesses were there, but they never got any institutional sponsorship,” Thompson said. “We see a tremendous opportunity in the financial services industry with the maturation of the independent provider.”
GMI develops model portfolios in equity and fixed income using proprietary Standard & Poor’s data and analytics such as S&P Ratings, S&P Indices and CompuStat. It operates through S&P Investment Advisory Services in the United States, and McGraw Hill Research Europe Limited in the United Kingdom and Europe.
“The Global Markets Intelligence business is a great example of how S&P Capital IQ continues to leverage proprietary content, analytics and intellectual property to help our customers drive growth,” said Lou Eccleston, president of S&P Capital IQ and S&P Indices, in a statement.
Eccleston initially joined Standard & Poor’s in 2008 as executive managing director of Fixed Income Risk Management Services. When he joined the firm, he and Thompson started to take a closer look at S&P Capital IQ’s businesses and realized that they would be able to do more for indie advisors if they joined the three smaller businesses into a single unit, according to Thompson.
GMI does not administrate or custody customer securities nor engage in securities transactions; rather, it offers clients a tremendous number of models, including a “phenomenally powerful” credit risk model, Thompson said. It is a nondiscretionary advisory business that provides risk-based equity, fixed-income portfolio strategies, asset allocation and fund review services to asset managers.
“S&P Capital IQ is undergoing tremendous change” in response to change in the advisory space, Thompson said, adding that the firm will be making a big announcement in the next two weeks that involves an international deal for one of S&P Capital IQ’s credit strategies.
“We know research and we know advisory,” Thompson said. “The company is really letting GMI operate independently, to do whatever is in the best interest of the customers.”
Global Markets Intelligence is a completely nondiscretionary advisory business that provides risk-based equity, fixed income portfolio strategies, asset allocation, and fund review services to asset managers. GMI does not administer or custody customer securities, invest, nor engage in securities transactions in any form.
Read about S&P Capital IQ’s 2011 U.S. Mutual Fund Excellence Award winners at AdvisorOne.