McGraw-Hill is putting away the textbooks and focusing solely on financial data that advisers use in their investments and in measuring their clients' progress.
Pending shareholder approval Wednesday, the company will re-brand itself as S&P Global, says CEO Doug Peterson.
"No more textbooks," Mr. Peterson said. "After the sale of J.D. Power & Associates, we'll be 100% in analytics, data, and benchmarks."
Most advisers think of Standard & Poor's as a prime mover among
exchange-traded funds: 694 ETFs are benchmarked to S&P indexes, and the SPDR S&P 500 ETF (SPY) is the largest ETF linked to the iconic benchmark. Its new retirement indexes, the S&P STRIDE (Shift to Retirement Income and Decumulation) indexes, are a multi-asset class index that transitions from growth to retirement income based on target dates.
The series was created in response to the need for indices that can benchmark investment strategies that transition from asset growth to income generation. The asset allocation for each index in the series is based on a predetermined life cycle glide path and each index is fully investable, with varying levels of exposure to equities, nominal fixed income securities, and inflation-adjusted bonds. “It's a way to benchmark retirement outcomes over time,” Mr. Peterson said.
McGraw-Hill is also pushing into
environmental, social and governmental indexes, currently dominated by MSCI.
ESG is an important area for clients who care about the social impact of their investments, particularly for younger investors.
The name change to S&P Global was sparked, in part, by McGraw-Hill's $2.23 billion acquisition of SNL Financial, a Charlottesville, Va.-company in 2015. SNL focused on the banking, insurance, energy and real estate industries.
McGraw-Hill has had a long and painful journey since the financial crisis, when it was excoriated for awarding top debt ratings to collateralized mortgage-backed securities. The company was unpleasantly reminded of its recent past in
The Big Short, the 2015 movie about the financial crisis. McGraw-Hill paid $1.6 billion in 2014 for legal and costs as a result of the financial meltdown, and another $54 million in 2015.
Those costs are largely — but not entirely — past, Mr. Peterson said, and the company has worked with regulators to make the company freer from conflicts of interest and move away from its past. “We have higher requirements for AAA debt ratings,” Mr. Peterson said. “We've spent a lot and done a lot to incorporate the lessons we've learned from the crisis. “
(Updates to correct earlier quote in the story to read “sale of J.D. Power & Associates” instead of “spinoff.”)
