MSCI ACWI Index
For some time, certain institutional investors have been questioning the traditional strategic equity allocation split between domestic and international equities. Many now believe that this split - built on historic notions of segmented economies, high levels of foreign investment restrictions and domestically-focused companies - potentially comes with important market timing risks and opportunity costs.
A number of prominent pension plans now consider 'Global Equity' as a single strategic asset class. Consultants too are more frequently recommending a global equity policy benchmark as the starting point for asset allocation. These developments - perhaps a natural consequence of globalization - reflect a possible evolution in the investment process for institutional investors looking to capture a global equity opportunity set and eliminate unintentional home-biases.
A broad and investable global equity benchmark, such as the MSCI ACWI IMI (Investable Market Index), can play a critical role in an integrated global investment process. MSCI ACWI IMI covers over 9,000 securities across large, mid and small cap size segments and across style and sector segments in 44 Developed and Emerging Markets.
Clients seeking an even more comprehensive global equity benchmark may consider the MSCI ACWI All Cap Index. It covers approximately 14,000 securities and includes large, mid, small and micro cap size segments for all Developed Markets countries in the index together with large, mid and small cap size segments for the Emerging Markets countries.
MSCI ACWI IMI or the MSCI ACWI All Cap Index can be used as broad global equity benchmarks for:
- Asset Allocation - Providing a consistent and complete representation of the global equity markets, MSCI ACWI IMI can assist with asset allocation decisions by helping to: capture the full spectrum of diversification opportunities; identify implied bets; and quantify any home bias in an equity allocation.
- Performance Measurement and Attribution - Several plan sponsors and consultants use MSCI ACWI IMI as the benchmark for global mandates. Regional subsets of MSCI ACWI IMI, such as MSCI EAFE IMI or MSCI Emerging Markets IMI, are used for more specialized investment mandates.
MSCI ACWI All Cap Indexes are created by appending the MSCI Micro Cap Indexes to MSCI ACWI IMI.
The MSCI Select OECD Index and MSCI Select OECD Investable Market Index (IMI) are composed of securities from member countries of the 'Organisation for Economic Cooperation and Development' (OECD) that are covered by MSCI.