Professional Services Index Launched

(By Richard Holway 3.00pm 24th March 09) Interested to learn today of the Launch of a new Professional Services Index to cover law firms, management accountants etc. "The Managing Partners’ Forum (MPF), representing senior managers in professional services firms, organised the launch of the index that brought together 35 companies, including: Penna Consulting (support services), WS Atkins (support services), M&C Saatchi (media); and DTZ Holdings (property). To qualify, 80 per cent of the company’s core business had to require specialist knowledge, they must be regulated by a professional body or licensing authority, have an ethical code and provide infrequent, technical or unique services. Listed companies operating in financial services or with a market capitalisation below £20 million or above £1 billion were excluded."

The constituents of the Professional Services Index initially have a market value of £3.9b. Alex Magni, head of research at Noble, said "There are no specialist funds dedicated to professional services firms. Even in challenging market conditions, professional firms are fairly resilient.” Using historic data the index has outperformed the FTSE AIM 100, but shows more volatility than the FTSE 350 Support Services and FTSE 350 indices, according to MPF.

Indices are important. The absence of any tech indices on the LSE in the 1990s handed a major advantage to NASDAQ. TechMark was launched at the very height of the dotcom boom – and has suffered ever since. The fact that there hasn’t been a Professional Services Index before is amiss. Afterall it is said to represent c8% of GDP (tech is c10%). The overlap with our own tech sector will be significant. WS Atkins is a player in many of the outsourcing contracts we track. Some companies might well prefer to be in a Professional Services index than in a Tech index.