Morningstar Indexes Selected by IMX Health for First Healthcare Futures Exchange Product Offering

Rhea-AI Summary

Morningstar, Inc. partners with IMX Health to launch the first index-based futures product using the Morningstar US Healthcare Index, catering to the healthcare industry's risk management needs and expanding market opportunities.

Insights

Financial Analyst

The licensing of the Morningstar US Healthcare Index to IMX Health for the creation of a new futures product represents a strategic expansion in the financial derivatives market. The introduction of this index-based futures product enables investors to hedge against the volatility of the healthcare sector, which is a significant component of the U.S. economy. This move could potentially increase the liquidity of healthcare-related securities and provide a more efficient way for market participants to manage risk.

From a financial perspective, the creation of a dedicated healthcare futures market by IMX could lead to increased trading volumes and interest in healthcare investments. This may result in a more dynamic pricing environment for healthcare stocks, as futures markets often provide forward-looking price discovery. The potential benefits for Morningstar include diversification of revenue streams and enhancement of their brand within the derivatives market.

However, the success of this initiative will largely depend on the adoption rate by institutional investors and the degree to which it improves market efficiency. If widely accepted, it could set a precedent for other sector-specific futures products, further segmenting the derivatives market.

Market Research Analyst

The partnership between Morningstar and IMX Health underscores the growing demand for sector-specific financial instruments, particularly in the healthcare industry. Considering the healthcare sector's nearly 20% contribution to U.S. GDP, there is substantial interest in tools that can provide risk management solutions specific to this industry. The index's composition, featuring prominent companies like UnitedHealth, Eli Lilly and Johnson & Johnson, ensures relevance and appeal to a broad range of investors.

The development of the Morningstar US Healthcare Index-based futures product could also signal a trend towards more specialized financial products. As investors seek to fine-tune their portfolios and manage industry-specific risks, we may see an uptick in the creation of similar products across other sectors of the economy. This trend could lead to more nuanced investment strategies and a greater need for sector expertise among financial professionals.

Healthcare Market Analyst

From a healthcare industry perspective, the introduction of a futures market based on the Morningstar US Healthcare Index provides a novel mechanism for healthcare entities to manage financial risk. The index's focus on companies across various subsectors, including biotechnology, pharmaceuticals and medical equipment, reflects the diverse nature of the healthcare industry and the different risk profiles each subsector carries.

For healthcare companies, this new financial instrument may offer an additional layer of financial stability, allowing them to hedge against sector-specific risks such as regulatory changes, drug approval outcomes, or shifts in healthcare policy. Over time, this could encourage more strategic financial planning and investment within the healthcare industry, potentially leading to more robust and resilient healthcare companies.

The fastest growing global index provider has licensed its Morningstar US Healthcare Index to IMX Health, the first financial futures exchange focused on the healthcare industry, as the basis for its first index-based futures product

CHICAGO--(BUSINESS WIRE)-- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today announced that the Intelligent Medicine Exchange (“IMX”), the first futures and options exchange focused on the healthcare economy, has aligned with Morningstar Indexes to offer its first futures product. The IMX exchange was designated by the Commodity Futures Trading Commission in January of this year.

Healthcare represents nearly 20% of U.S. GDP but until IMX there was no dedicated derivatives market specifically focused on managing healthcare risk.

The new futures product from IMX Health will be based on the Morningstar US Healthcare Index, which measures the performance of approximately 170 U.S. public healthcare companies representing biotechnology, pharmaceuticals, research services, home healthcare, hospitals, long-term care facilities and medical equipment and supplies. This market capitalization-weighted index is designed for optimal tradability and liquidity. Among the largest current holdings in the index are household names like UnitedHealth, Eli Lilly, and Johnson & Johnson.

Amelia Furr, global head of sales for Morningstar Indexes, said: “We are excited to offer a Morningstar index as the basis for futures on IMX exchange. This new relationship represents another step in the growth of our index-based derivatives products business in recent years and is a great example of our expansion to a much broader ecosystem of global investor audiences.”

Jim Plante, chief executive officer and co-founder of IMX, said: “The Morningstar U.S. Healthcare Index is the ideal underlying cash equities index on which to base our first futures contract. Morningstar Indexes understands the importance of market representation as well as liquidity and tradability when operating in index-based futures and recognizes the important balance between these two requirements when designing an index suited for our market. We are delighted to have them as our first collaborator, as we continue to develop our own proprietary indexes that will complement theirs.”

IMX trading operations are expected to commence in the second quarter of 2024.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data.

Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $264 billion in assets under advisement and management as of Sept. 30, 2023. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

About Morningstar Indexes

As the fastest-growing global index provider for the last two years according to Burton-Taylor International Consulting, Morningstar Indexes was built to keep up with the evolving needs of investors—and to be a leading-edge advocate for them. Morningstar's rich heritage as a transparent, investor-focused leader in data and research uniquely equips Morningstar Indexes to support individuals, institutions, wealth managers and advisors in navigating investment opportunities across all major asset classes, styles, and strategies. From assessing risk and return with traditional benchmarks to helping investors effectively incorporate ESG objectives into their investment process, our range of index solutions spans an investment landscape as diverse as investors themselves. We help investors answer today's increasingly complex questions so that they can more easily reach tomorrow's goals. Please visit indexes.morningstar.com for more information.

About IMX Health

IMX Health, LLC, also known as Intelligent Medicine Exchange (IMX), is a subsidiary of holding company IMX, LLC. For more information, visit www.imxhealth.com.

©2024 Morningstar, Inc. All Rights Reserved. The information, data, analyses and opinions contained herein (1) include the proprietary information of Morningstar, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar has not given its consent to be deemed an "expert" under the federal Securities Act of 1933. Except as otherwise required by law, Morningstar is not responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. References to specific securities or other investment options should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance does not guarantee future results. Before making any investment decision, consider if the investment is suitable for you by referencing your own financial position, investment objectives, and risk profile. Always consult with your financial advisor before investing.

Indexes are unmanaged and not available for direct investment. Morningstar indexes are created and maintained by Morningstar, Inc. Morningstar^® is a registered trademark of Morningstar, Inc.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20240305493160/en/

Media:

Morningstar Indexes:

Tim Benedict, +1 203 339-1912 or newsroom@morningstar.com

IMX Health:

Rich Myers, 347-774-1125 or rmyers@profileadvisors.com

Source: IMX Health, LLC

FAQ

What index has Morningstar licensed to IMX Health for its first futures product?

Morningstar has licensed the Morningstar US Healthcare Index to IMX Health for its first futures product.

What percentage of the U.S. GDP does healthcare represent?

Healthcare represents nearly 20% of the U.S. GDP.

When was the IMX exchange designated by the Commodity Futures Trading Commission?

The IMX exchange was designated by the Commodity Futures Trading Commission in January of this year.

When are IMX trading operations expected to commence?

IMX trading operations are expected to commence in the second quarter of 2024.