SEI's Barbaneagra: Index providers are not incentivised to do the right thing

'Extortionate fees'

Index providers have a major impact on investors' costs yet they are not regulated or accountable for their work, warns Eugene Barbaneagra, portfolio manager at £638bn asset management firm SEI.

Speaking to Investment Week, Barbaneagra said index providers, such as FTSE Russell and MSCI, were running a "duopoly" in Europe meaning they could charge "extortionate" fees to investors. "If you think about the FTSE 100 or the MSCI World, it is a very simple process which can be done in two seconds, but the price investors pay for benchmarking has gone from virtually zero 20 years ago to double digit basis points. "There is no competition," he continued. "Effectively it is a duopoly between MSCI and FTSE and I wish index providers did less instead of more." One solution to this i...