Official Launch of BX Index

The Index Platform Built for Advisors
BX Index is proud to announce the launch of its ecosystem for financial advisors. BX Indexes are now available for licensing and execution through Artha (www.helloartha.com). BX has collaborated with partners to create a platform featuring 40+ indexes developed by a dozen index creators.
BX Partners, a direct indexing platform that provides access to a broad range of asset classes and investment strategies sectors, is proud to announce its partnership with Index One, a leading technology-based index provider. Index One serves as a calculation agent for BX indices and is a valuable partner in various aspects of the business. Index One calculates upwards of 40 indices for BX that provide various direct indexing strategies focused on delivering desirable results. These strategies are classified under four families: Tactical, Smart Factor Family, Alpha, and Core Family.
We worked with our network of partners to create indexes specifically designed for advisors to create superior solutions for their clients in the direct indexing space. The capabilities and tools of IndexOne, along with the responsiveness of their team, enabled us to accomplish bringing this suite of indexes to market on a much faster timeline than would have otherwise been possible.
Chris McHeffey
President of BX Partners
View all indices at: www.indexone.io/indicies or www.bxindex.com

Why Choose Us: Benefits of Using BX Index

The creators of BX Index, initially interested in the benefits of direct indexing, found its typical offerings lacking for the advisor market. In response, they developed a catalog of indexes with these targeted benefits:
BX Index offers significantly more compact indices, typically containing 10-40 holdings compared to the hundreds or thousands offered by others. This streamlined approach makes account views and statements easier to understand while minimizing irrelevant holdings. Additionally, for those who utilize tax-loss harvesting, our compact indices can result in significantly fewer confirmations and line items on client tax returns, streamlining the process and reducing complexity.
Compact Indexes: Typically 10-40 holdings, versus hundreds or even thousands of holdings offered by most.

Versatile Mandates: Indexes are designed with different mandates that can be combined to create comprehensive portfolio solutions

High Performance: Indexes designed to deliver performance rather than mediocrity
Open Architecture Sourcing: BX Index works with many index creators, allowing advisors to blend indices with varied drivers. This enhances the potential for lower correlation and improved risk-adjusted returns.

Custom Index Creation: BX Index will partner with the RIA and our network of index creators to create precisely the index the advisor desires. These custom indices can be white labeled by the advisor for use with their clients (subject to minimums).

Partner Corner: Alphabot

Alphabot (www.alphabot.net) enables BX to partner with advisors to combine BX indices and other instruments in order create portfolios that have the most desirable characteristics versus goals. AlphaBot is a Portfolio Construction and Analytics tool offering a novel blend of functionality that has never been seen in either the traditional or alternative investment spaces. It combines features that make complicated tasks simple starting from data acquisition, performing analysis, and building portfolios.

Research: What is Smart Beta?


Traditional investment wisdom dictates a clear divide between active and passive strategies, but innovative approaches like 'Smart Beta' and 'Factor Investing' are upending this long-held belief. There is likely to be a significant movement away from the simplistic cap-weighted approach going forward powered by new, high-quality alternatives.
Smart beta is an investment strategy designed to outperform traditional market-cap-weighted indices like the S&P 500. It systematically selects and weights stocks based on specific factors or criteria, such as volatility, dividends, earnings, or other fundamental metrics.
Chosen based on empirical evidence for better risk-adjusted returns, this approach helps investors target specific objectives or risk profiles while maintaining the transparency and cost-efficiency of indexing. Unlike traditional indices that rely solely on market capitalization, smart beta strategies offer a more tailored investment approach.
As the landscape of investing continues to evolve, smart beta and factor investing offer investors a compelling way to access active strategies through the benefits of indexing. By understanding these approaches and their potential advantages, investors can make more informed decisions in their pursuit of better risk-adjusted returns.
Skilled index creators who skillfully exploit known inefficiencies or who strategically time factor investments can potentially generate returns that are difficult to replicate through cap-weighted indexing alone.

Index Spotlight: BX Dividend Growth Titans 10 Index

Powered by phaseinvest
A CIO at a large RIA was impressed with the thinking and engineering behind a number of the BX Indexes, but needed something a bit different than what was available at the time. The RIA had been running, in house, several different Dividend Aristocrats-themed portfolios and wanted to determine whether we could help them:
  • Save the time and energy spent managing individual stock portfolios, and potentially shed some compliance burden at the same time

  • Deliver the clients a more differentiated experience than a simple ETF investment

  • Deliver a more compact version with only 10 holdings

  • Create a higher income stream for their clients (dividend yield)

  • Provide more downside protection than their current system

BX took this request to our partners at phaseinvest to determine whether we could accomplish what the client wanted. We took the appropriate universe (companies with a 25+ year history of dividend growth) and applied phaseinvest’s proprietary Phase Detection Engine to this universe. The PDE is a proprietary and highly differentiated system for determining the momentum of stocks. We wanted to use this because we felt it would help weed out the “Value Traps” that are the Achilles’ heel of so many simplistic dividend stock selection systems.

There is then a screen to bias the portfolio in favor of higher-yielding stocks to fulfill the client’s desire for income. Finally, the top 10 stocks are selected, and the portfolio is rebalanced quarterly. The backtest came out with impressive results, so we moved forward with the strategy. This strategy became the BX Dividend Growth Titans 10. For simplicity, here are some live (not backtested) statistics compared to the NOBL ETF:

Comparison Versus NOBL ETF since 3/15/24*
BX Dividend Growth Titans 10
NOBL ETF
Difference
Dividend Yield
3.54%
2.43%
1.11%
Cumulative Return
2.83%
-2.13%
4.96%
Cum Return Down Days
-5.95%
-9.19%
3.14%
Cum Return Up Days
9.34%
7.77%
1.64%
* As of May 1 2024
In this example, we demonstrate that these thought processes can produce better client outcomes, with a portfolio that has thus far delivered:
  • A meaningfully higher dividend yield

  • Better Total Returns

  • Better Down Market Performance

  • Better Up Market Performance

  • A high degree of differentiation for the RIA, as their clients would be unlikely to be exposed to this strategy through other advisors
For more information on this and/or our other indices, please click the link below to visit www.bxindex.com or send an email to us at [email protected]

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DISCLAIMER
Performance Disclosure

All indexes and research provided are strictly for financial professional use only and not to be shared with the public. Indexes are licensable through BX Index by financial professionals.

Please see the index fact sheets for more information about any specific index, including launch date. Some of these indices contain data that reflect “hypothetical” or “back-tested” returns. All information prior to an index’s launch date is hypothetical(back-tested), not actual performance, and is based on the index methodology in effect on the index launch date applied to the universe at the time. Complete index methodology is available upon request. Back-tested performance reflects application of an index methodology and selection of index constituents with the benefit of hindsight and knowledge of factors that may have positively affected its performance and may be considered to reflect survivor bias. Actual returns may differ significantly from, and be lower than, back-tested returns. Past performance is not an indication of future results. Back-tested performance is for use with institutions/financial professionals only and is not for use with retail investors.

Index returns do not represent the actual trading of investable assets/securities. Index One maintains the index and calculates index levels and performance shown but does not manage actual assets. Returns shown do not reflect any sales charge or investment management fees that may have been paid.

General Disclaimer

BX Index and its third-party index providers do not provide investment or tax advice. BX Index and its third-party index providers make no representation or warranty, express or implied, as to the ability of any index to accurately represent its objective and they shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Past performance of an index is no guarantee of future results. All information provided is general in nature and not tailored to the needs of any person(s) or entities. BX Partners and its third-party index providers are not an investment nor tax advisor and make no representation regarding the advisability of investing in any specific index model for any client.