Markets in Focus: Looking Beyond the Rate Hikes

In the second quarter of 2023, the MSCI ACWI Index gained 6.3%, extending the year-to-date gain to 14.3%, led by strong earnings from the technology sector. Among a universe of 3,014 stocks, only about 26.5% outperformed the index in the year to date, making it a challenging environment for active managers. The "Magnificent Seven" (Apple Inc., Microsoft Corp., NVIDIA Corp., Amazon.com Inc., Meta Platforms Inc., Tesla Inc. and Alphabet Inc.) contributed more than 50% of index returns (close to 70% for MSCI USA Index), reflecting the concentration of outsized returns in mega caps.

Several questions remain on the minds of investors. Does the outlook for earnings-per-share (EPS) growth reflect a soft landing, hard or perhaps rocky landing? How have analysts responded, and have the revisions in their EPS predictions been fully reflected in valuations? And considering inflation remained higher than many expected at the beginning of the year, how might equities respond to interest rates’ remaining higher for longer or potentially pivoting? 

In this virtual event we looked to address the above questions and highlighted key trends in performance across ESG, Climate, Thematic and regional indexes in Q2, 2023.

We also shared some great insights on investors’ thinking regarding equity factors and their evolving role in asset allocation and how investors believe traditional factor strategies should evolve to better serve the increasingly complex investment landscape.

Agenda topics:

• Following trends in analyst predictions
• How have indexes responded to rate cycle’s pauses and pivots?
• Results of MSCI’s institutional factor survey - what are investor’s views on equity factors and their evolving role in asset allocation?