The conventional index business in Asia is stumbling but newfangled types of indices are taking up the slack, says Sumeet Nihalani, senior director of sales for Asia and the Middle East at Dow Jones Indexes in Singapore.

He expects the business of creating tradable indices for structured products, which was an important revenue source for index vendors until 12 months ago, will resume in early 2009.

ôThere has been softness in the structured-products market but these things can be created in difficult times,ö Nihalani explains. ôStructured products are used to respond to market needs.ö

He thinks the next area of growth for his business will be creating mixed-asset indices for new products that combine exposure to developed-market fixed income, global equities and commodities. Client fund managers or investment banks can either select one from Dow Jones IndexesÆ existing stock, or the vendor can tailor these.

In Asia, the biggest component of the firmÆs business remains conventional, capitalisation-weighted equity indices, most of which are used for long-only investment benchmarks. The second biggest source of revenue is Islamic indices, a sector where growth has continued this year despite market turmoil.

This is supported by the increasing sophisticated market for Islamic investment products in Southeast Asia and the Middle East, such as this yearÆs inaugural Islamic exchange-traded fund, which debuted in Malaysia. The sector has been buoyed by the growth of Middle East-based sovereign wealth funds looking for sharia-compliant products. Dow Jones Indexes has also introduced a æDharmaÆ series of faith-based indices for Hindus and Buddhists.

While commodity indices have also enjoyed growth among Asia-based clients, Nihalani predicts the rest of the year will see the rise of infrastructure indices. Its series, the Brookfield Global Infrastructure indices, tracks listed owners and operators of infrastructure assets.

The firm is also marketing fundamental-weighted indices, target-date return indices (for pension funds), and most recently a new India blue-chip product under its Titans series.

But the business remains constrained by the fact that so many fund managers are preoccupied by the credit crisis and plummeting valuations across stock markets. ôAll conventional products are under strain,ö Nihalani says.