Indexology^® Blog

The Financials sector has traditionally been categorized as value (i.e., stocks considered undervalued but with stable fundamentals) instead of growth (i.e., stocks with higher valuations but that are expected to grow faster than the market). Historical data supported this perception until recently (see Exhibit 1). By the end of May 2026, the weight gap for the Financials sector between the S&P Developed Ex-U.S. LargeMidCap Value and S&P Developed Ex‑U.S. LargeMidCap Growth narrowed to less than 1% (24.3% versus 23.4%, respectively), after being around 21% one year prior (35.1% versus 14.3%, respectively). This change shows a notable convergence between styles.

The recent performance of international equities played a key role in this convergence. Driven by diversification away from U.S. equities, international equities have seen renewed interest. After posting one of its strongest annual performances in 2025 (up 35.1%), the S&P Developed Ex-U.S. LargeMidCap’s outperformance persisted this year; by the end of May 2026, the index was up 16.1% YTD, while the S&P 500^® was up 11.3% YTD (see Exhibit 2). Financials, the largest GICS^® sector within the index by weight, has been the primary driver of this performance. It surged 52.0% in 2025 and was up 32.8% YTD by May 31, 2026.

To understand why this performance altered the sector’s style profile, it is helpful to revisit how S&P Dow Jones Indices determines the style of an individual stock. According to the S&P Global BMI Methodology, a growth score-to-value score ratio is calculated for each stock. The style scores are calculated using standardized fundamental data of the company, as noted in a previous blog. Depending on the score, the float-adjusted market cap of a stock is assigned completely to the growth or value version of the index or is distributed proportionally based on its relative distance to the average value and growth scores. Exhibit 3 illustrates this classification.

With that framework in mind, the style reclassification is explained by two main factors. First, three of the four value factors (book-to-price, cash-flow-to-price and sales-to-price) are directly affected by share price movements. Since price appears in the denominator of these ratios, sharp price appreciation weakens the value score, assuming that balance sheet fundamentals do not rise at the same pace.

On the other hand, the growth score focuses on the growth of earnings and sales. In recent years, European banks have seen an improvement in profitability, while major Japanese banks reached record profit levels in 2025 for a second consecutive year.

Together, these developments have created a style reclassification effect. On one hand, valuation‑based value signals weakened as bank share prices surged. On the other hand, rising earnings and improving performance profiles strengthened growth factors.

This shift was clearly visible during the September 2025 rebalance. Compared to the prior year, the weight of Financials in the S&P Developed Ex‑U.S. LargeMidCap Growth increased from 12.5% to 24.0%, while its weight in the S&P Developed Ex-U.S. LargeMidCap Value declined from 32.3% to 26.1%. During this period, 19 stocks transitioned from being categorized as blended to growth, and 11 companies switched from value to growth, adding approximately USD 2.1 trillion in market capitalization to the S&P Developed Ex‑U.S. LargeMidCap Growth (see Exhibit 4).

Large banks have not only driven index performance; they have also contributed to the migration across styles. BBVA, Royal Bank of Canada, UniCredit and Mitsubishi UFJ, which were part of the S&P Developed Ex-U.S. LargeMidCap Value before the September 2025 rebalance, represented 4.9% of the S&P Developed Ex‑U.S. LargeMidCap Growth’s total weight in May 2026.

In brief, the strong performance of international Financials in recent years, driven by both rising share prices and improved fundamentals, has altered the long-standing perception of the sector as exclusively value oriented. Internationally, Financials has become more balanced in terms of style, converging between growth and value weights.

How is innovative index construction supporting investment decisions in a shifting interest rate environment? S&P DJI’s Jessica Tan sits down with industry experts to share insights on how market participants can better navigate uncertainty and uncover new opportunities in fixed income through index-based strategies.

What innovative strategies are market participants increasingly exploring to measure growth? S&P DJI’s Jason Ye sits down with Andrew Geoghegan from ausbiz to discuss how GARP, or growth at a reasonable price, is an approach that is gaining traction in the Australian market.

For more than a century, index providers have served a specific function in capital markets: define the standard, calculate the benchmark and the data, license the IP. The infrastructure was built for a world of market opens and closes, batch file delivery, and intermediated access. That infrastructure continues to work extraordinarily well.

But a parallel system is being built alongside it, and it operates on fundamentally different assumptions.

On-chain markets run 24/7. Settlement is programmable. Capital moves across protocols without intermediaries. Products that have no equivalent in traditional markets (perpetual futures without expiration, cross-chain margining, prediction markets scaling to billions in monthly volume) are being created and adopted at a pace that traditional market structure was never designed to match. Tokenized versions of traditional instruments (treasuries, credit, equities) are now accessible on-chain, reaching approximately $30 billion¹ and growing rapidly. These are not new asset classes. They are existing assets delivered through new, globally accessible, programmable infrastructure.

S&P Dow Jones Indices has created value by setting the benchmarks markets trust – through transparent methodologies, disciplined governance, and benchmark integrity that institutions rely on to allocate capital with confidence. That same value is now increasingly essential in DeFi, where market growth depends on trusted data, clear standards, and transparent infrastructure.

When spot crypto ETFs launched in the U.S., the benchmarks behind them came from crypto-native providers, not from traditional index firms. Those providers built real-time calculation capability, secured regulatory standing, and locked in relationships with ETF issuers while most of us were still evaluating the space. That is a competitive fact worth acknowledging, not explaining away.

However, the next wave of on-chain financial products will need index standards for asset classes that don’t yet have them: DeFi protocol benchmarks, tokenized equity indices, on-chain structured products. And they will need those standards from providers with the governance, methodology, and institutional credibility that this industry was built on. That is where traditional index providers can meaningfully progress the industry, if we move with intention.

Moving with intention means three things.

First, it means becoming a participant in on-chain infrastructure, not just a licensor to it. Publishing index data through oracle networks. Running validators. Understanding staking not as a speculative activity but as a utility that generates data, connectivity, and credibility within protocol ecosystems. This is unfamiliar territory for the traditional index industry. It requires new models, not the abandonment of old principles.

Second, it means building technology that meets markets where they are. End-of-day batch calculation served a world that closed at 4PM. On-chain markets never close. Real-time, continuous, API-native data delivery is not a feature request. It is the minimum viable infrastructure for credibility.

Third, it means recognizing that standards lock in early. The index methodologies embedded in smart contracts and DeFi protocols today will be the defaults that institutional capital builds on tomorrow. Waiting for the market to mature before engaging is a strategy for irrelevance. The S&P 500^® became the global equity benchmark not only because it was the best U.S. large cap equity index when passive investing scaled. But also, because it was already the standard.

The same dynamic is playing out on-chain. The question is whether the next generation of financial market standards will carry the credibility of the institutions that built this industry, and as the world’s leading index provider, we’re aiming to lead the charge.

From Strategy to Execution

As demand for broader, diversified exposure to DeFi continues to grow, S&P Dow Jones Indices serves as a bridge between markets and investors—transforming complexity into transparency, investability, and governance across digital asset markets.

Some of our work is already visible:

• Facilitating fund tokenization. In July 2025, S&P DJI collaborated with Centrifuge to license the S&P 500 for fund tokenization, leading to the first licensed on-chain S&P 500 index fund in September 2025.
• Pioneering indices on-chain. In early 2026, S&P DJI and Kaiko announced the tokenization of the iBoxx U.S. Treasuries Index on the blockchain. The significance is not only symbolic. It marks the first time a major index provider has made a financial benchmark available as a native digital asset, with embedded index data distribution and permissioning ready for licensing.
• Innovative digital asset indices. In October 2025 the S&P Digital Markets 50 Index was launched, combining cryptocurrencies and publicly traded crypto-linked equities into a single benchmark. That approach reflects an increasingly important market reality: the boundary between digital assets and traditional securities is becoming less useful than the broader ecosystem view investors increasingly need.

These are not side projects. They are early signs of what it looks like when an index provider chooses to help shape on-chain finance rather than simply respond to it.

More broadly, as digital assets and tokenized markets continue to institutionalize, S&P Global is uniquely positioned as an enabler between TradFi and DeFi. Through our sister-divisions, Stablecoin Stability Assessments (now on-chain through Chainlink), the first credit rating of a DeFi protocol (Sky Protocol), and tax solutions for digital assets are among the early solutions S&P Global brings to the digital asset community.

If the next era of capital markets will be more programmable, more continuous, and more globally accessible, then the role of the index provider must evolve with it. The opportunity is not just to extend existing benchmarks into new channels. It is to bring the transparency, governance, and institutional trust that defined the last century of market infrastructure into the one now being built.

¹ Tokenized Real-World Assets Hit $30 Billion as Crypto Market Matures – CoinCentral

In the previous wrap-up of the webinar “Benchmarking Digital Asset Funds: Are Managers Measuring Performance Effectively?” we discussed the manager perspective; here, we take a look at the allocator perspective and the index provider response to a maturing market and the institutional market’s requirements for better benchmarks.

The ETF Effect: Bitcoin Beta Has Become Cheaper

If Bitcoin is an imperfect benchmark, it remains an unavoidable one for a different reason: it may now be considered the clearest expression of cheap, accessible crypto beta.

Chris Solarz framed the issue from the allocator’s perspective. For him, benchmarking is the prerequisite for identifying alpha, because outperformance only has meaning relative to a credible alternative. And that alternative has changed materially since the arrival of spot Bitcoin ETFs. Solarz noted that Bitcoin exposure can now be obtained at low cost—he cited fee competition driving ETF pricing down to as little as 14 bps.¹

That has major implications for active managers. If investors can access core crypto beta passively and cheaply, then the justification for paying hedge fund-style fees rests on true excess return, not simply exposure to a rising market. Solarz put it plainly: the only thing investors should pay for is alpha. If net returns are not above what could have been achieved through a passive index or ETF, then the value proposition of active management becomes difficult to defend.

This is one of the webinar’s most important institutional takeaways: the commoditization of beta is leading to more precise conversations about what active crypto managers actually do. That is healthy for the market, but it may raise the bar considerably.

A More Segmented Way to Measure Crypto Funds

Solarz’s solution is not to abandon broad reference points, but to use a more segmented framework. When evaluating liquid digital asset managers, he starts with four benchmarks:

• Bitcoin;
• Ethereum;
• Solana; and
• Altcoins.

This approach recognizes that digital assets are not one homogeneous pool of risk. Bitcoin remains the dominant reference asset; Ethereum reflects a distinct smart-contract and ecosystem; Solana increasingly represents another major asset and the remaining altcoin universe requires its own lens.

This framework helps allocators ask sharper questions. Is a manager outperforming because they generated security selection alpha? Because they made a successful allocation call across crypto subsegments? Or because they simply maintained exposure to the best-performing beta bucket?

Solarz was also candid that no single framework fully resolves the issue. Institutional committees will still ask the obvious question: why not just own Bitcoin? That remains a fair opportunity-cost benchmark, especially for investors starting from zero. But he argued that relying on Bitcoin alone may do an injustice to the complexity of the asset class, where sectors such as DeFi, payments, gaming, metaverse and other subsectors can behave very differently.

In other words, Bitcoin may still be a starting point, but it may no longer be the end of the conversation.

Why Building Indices in Crypto Is Harder than It Looks

Rounding out the discussion with the index provider’s perspective, S&P Dow Jones Indices (S&P DJI) approaches the market through several lenses: single-coin indices, multi-coin strategies, crypto-linked equity indices and hybrid cross-asset benchmarks that blend digital assets with traditional asset classes.

Even apparently simple questions like the following can become complex in this market.

• How should the price of a single token be constructed?
• Which exchanges should be used in the pricing methodology?
• What qualifies as large cap, mega cap or broad market in crypto?
• Should an index be purely market-cap weighted, equal weighted, capped or filtered?
• How should benchmark construction adapt as market concentration changes over time?

Index names alone never tell the full story. Methodology matters. Definitions matter. And in a market as dynamic as crypto, those definitions can change quickly as market structures evolve. At S&P DJI, we offer a range of digital asset solutions for different market objectives.

Learn more about our capabilities and view the full webinar replay.

¹ As of the time of the webinar. For more information, please see Daodu, Sam, “Bitcoin News: Morgan Stanley Just Launched the Cheapest Bitcoin ETF on the Market,” Yahoo Finance, April 11, 2026.