Extended-lister
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A Thematic Lens for Portfolios
Dec 17, 2020 Stuart Doole , Kumar Neeraj , Vishad Bhalodia Learn MoreWe show how MSCI Thematic Exposure relevance scores helped position growth funds, as an example, alongside thematic funds, and highlighted key megatrends that drove performance. A thematic lens can help analyze other categories and strategies as well.
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Kuwait’s Move from Frontier to Emerging Market
Dec 14, 2020 Saurabh Katiyar , Ashish Lodh Learn MoreKuwait’s reclassification from frontier to emerging market and inclusion in the MSCI Emerging Markets Index provides investors exposure to yet another Gulf Cooperation Council member, one that has worked to open its doors to foreign investors.
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Accounting for Revenue Sources Tells a Richer Story
Dec 11, 2020 Jean-Maurice LadureGlobal Investing , Emerging Markets , Economic Exposure
Learn MoreDespite North America’s outsized weighting in the MSCI ACWI Index, companies in the index generated only 30% of their global revenues there. We explore how examining revenue sources may help uncover opportunities of economic growth around the world.
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China Tech Investing: An Indexed Approach
Dec 2, 2020 Wei Xu , Kumar Neeraj , Devika Ghate Learn MoreChina’s emergence as a tech leader holds great potential. But its technology value chain isn’t limited to IT firms. Opportunity lies across sectors, from electric vehicles to medical devices. How does one effectively gain exposure?
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The universe of stocks represented by the MSCI USA Index comprises over 600 securities. U.S. investors might assume there are ample opportunities for diversification and potential risk reduction in the domestic market. Is this assumption correct?
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Chinese Government Bonds: Higher Yield, Less Risk?
Nov 12, 2020 Greg Recine , Juan Sampieri , Andy SparksGlobal Investing , Risk Management
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China A Shares: What Have We Learned?
Oct 30, 2020 Zhen WeiEmerging Markets , Global Investing
Learn MoreIn this first of a series of blogs covering specific index-inclusion stories, we explore China A shares’ inclusion in the MSCI Emerging Markets Index by looking back at how it occurred and what’s happened since with market and investor reaction.
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Aligning with the Paris Agreement: An Index Approach
Oct 22, 2020 Stuart Doole , Véronique Menou , Kumar NeerajESG Research , Global Investing
Learn MoreInstitutional investors are under pressure to align their strategies with a maximum global temperature increase of 1.5oC as targeted by the Paris Agreement. We examine how they can approach this while respecting other investment constraints.
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Factors in Focus: Impact of Inflation on Style Factors
Oct 2, 2020 Hitendra D Varsani , Waman VirgaonkarFactor Investing , Global Investing , Risk Management
Learn MoreGlobal equities continued to rally in Q3, brushing aside fear of a second wave of COVID-19 and a large economic slump. We review what it meant from an equity and fixed-income factor perspective and look at what our models showed headed into Q4
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Assessing Company Alignment with UN SDGs
Sep 14, 2020 Olga EmelianovaESG Research , Global Investing
Learn MoreFive years ago, the United Nations adopted 17 UN Sustainable Development Goals (SDGs) in an effort to end extreme poverty, reduce inequity and protect the planet by 2030. Using a new tool, we examine whether companies are walking the walk.
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ESG in Mexico: At a Fork in the Road?
Aug 27, 2020 Mario López-AlcaláESG Research , Emerging Markets , Global Investing
Learn MoreMexican companies’ ESG risk-mitigation practices have come a long way over the past decade, but there has been some slippage over the past two years. We examine the current status and why investors may want to pay attention.
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Alternative Views of Equity-Market Liquidity During COVID-19
Aug 26, 2020 Saurabh Katiyar , Reil Abucay , Chirag GosarEmerging Markets , Global Investing , Risk Management
Learn MoreInstitutional investors have typically used traded volume as a way to assess market liquidity. Adding alternative measures that gauge market impact and trading costs can provide a more comprehensive view for portfolio managers and traders.
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Hedging Inflation: A Scorecard
Aug 26, 2020 Juan Sampieri , Andy SparksIntegrated Risk Management , Fixed Income , Global Investing , Risk Management
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Understanding the Industry-Momentum Factor
Aug 19, 2020 Alex Johnson , Simon MinovitskyFactor Investing , Risk Management , Global Investing
Learn MoreWhen COVID-19 first swept through global equity markets, many factors exhibited unprecedented performance swings. How could institutional investors interpret the industry-momentum factor’s moves in the context of the underlying market dynamics?
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Index Futures and the Expansion of Equity Markets in EM and Asia
Aug 4, 2020 Zhen WeiGlobal Investing , Emerging Markets
Learn MoreGiven equity market growth in the emerging markets and Asia, and the dispersion of returns across individual subregions and countries, some have looked beyond traditional long-only approaches, to others, such as futures. We explore those options.
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Managing Climate Risk in Equity Portfolios: A Case Study
Jul 15, 2020 Bruno Rauis , Zoltán NagyESG Research , Global Investing
Learn MoreInstitutional investors are increasingly focused on mitigating their climate-related risks. How could a “typical” active global equity manager have managed these exposures without disturbing the portfolio’s risk and return characteristics?
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Would Integrating ESG in Chinese Equities Have Worked?
Jul 7, 2020 Naoya Nishimura , Shuo XuESG Research , Emerging Markets , Global Investing
Learn MoreESG ratings have reflected financial risk and returns in developed-market and emerging-market equities. But was this true in China, where ESG considerations are still in their infancy?
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Did Value-Factor Exposure Deliver for Value Funds?
Jun 29, 2020 Saurabh Katiyar , Ashish Lodh , Vishad BhalodiaFactor Investing , Global Investing
Learn MoreBuilding on previous MSCI research into the nuanced performance of the value factor, including the impact of sectors and other style factors, we look at how exposure to value drove the performance of actively managed value funds.
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ESG Ratings: How the Weighting Scheme Affected Performance
Jun 29, 2020 Zoltán Nagy , Linda-Eling Lee , Guido GieseGlobal Investing , ESG Research
Learn MoreOur recent research suggests that environmental and social issues were more industry specific and tended to show up in financial measures over a longer time frame compared to governance issues. How can E, S and G issues be combined?
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Which ESG Issues Mattered Most? Defining Event and Erosion Risks
Jun 22, 2020 Guido Giese , Zoltán Nagy , Linda-Eling LeeGlobal Investing , ESG Research
Learn MoreVery different ESG issues can be material for different industries. Our research suggests that risks can be divided into two main types: “event” risks and “erosion” risks to companies’ long-term competitiveness. Which ones mattered most for E, S and G?
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Is ESG All About the ‘G’? That Depends on Your Time Horizon.
Jun 15, 2020 Linda-Eling Lee , Guido Giese , Zoltán NagyGlobal Investing , ESG Research
Learn MoreThe conventional wisdom has it that governance is the most dominant of the three E, S and G pillars. But our analysis finds different results when looking at contribution to performance over different time horizons.
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Equity-Market Dislocation and Index-Based Investing
Jun 3, 2020 Zhen Wei , Shuo XuEmerging Markets , Global Investing
Learn MoreMarket turbulence amid COVID-19 presented risks and opportunities. We explore how indexes , combined with the use of fundamental data, provided a wealth of information to help identify potential market dislocations.
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Outcome-Oriented Factor Investing with a ‘Barbell’ Approach
Jun 1, 2020 Zhen Wei , Shuo XuFactor Indexes , Factor Investing , Global Investing
Learn MoreThough relatively new to wealth investors, index-based factor investing has some similarity to a high-conviction, outcome-oriented approach. We explore combining the two when seeking outcomes such as equity growth, yield enhancement and risk mitigation.
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Building Better ESG Indexes: 30 Years On
May 27, 2020 Stuart DooleGlobal Investing , ESG Research
Learn MoreHow ESG indexes have evolved over the past 30 years: A Q&A with Stuart Doole, head of new index development at MSCI, about his conversations with investors since the COVID19 crisis started, the growth of ESG investing and how MSCI Research uses AI and machine learning in developing its ESG indexes.
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Dividend cuts following the COVID-19 slowdown led to approximately USD 194 billion of lost dividends between February and April 2020. An approach that looked beyond dividend-yield ranking would have avoided some affected companies, based on our analysis.
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Five lessons for investors from the COVID-19 crisis
May 19, 2020 Dimitris MelasESG Research , Factors , Global Investing
Learn MoreCOVID-19 unleashed a torrent of sharp movements across global financial markets. We highlight five key lessons for investors regarding global investing, managing factors, active management, indexed investing and ESG investing.
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Index Rebalancing During High Volatility: A Balancing Act
May 13, 2020 Abhishek Gupta , Pavlo Taranenko , Sebastien LieblichGlobal Investing , Emerging Markets
Learn MoreSignificant volatility during COVID-19 highlights a need for index reconstitution, but some may worry about trading costs and excess turnover. We investigate the balance between appropriate market representation and avoiding high index turnover.
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Consumer ABS Under Coronavirus in the US and China
May 11, 2020 Yini Yang , Jian Chen , Joy ZhangEmerging Markets , Fixed Income , Global Investing , Risk Management
Learn MoreBeyond COVID-19’s steep human toll, the pandemic’s disruption of economic life has led to widespread loss of income and impaired some borrowers’ ability to repay loans. What could the impact be for investors in consumer asset-backed securities in the U.S. and China?
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Using Derivatives to Manage Volatile Markets
May 4, 2020 Hitendra D Varsani , Rohit MendirattaEmerging Markets , Global Investing , Risk Management
Learn MoreWe’ve previously noted growth in derivatives contracts to manage emerging-markets exposure in normal and stressed times. Now, facing a real-world stress test, how did investors use these tools? How have implied volatilities and option premium changed?
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MSCI ESG Indexes during the coronavirus crisis
Apr 22, 2020 Zoltán Nagy , Guido GieseESG Research , Emerging Markets , Global Investing
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Can diversification help weather the coronavirus storm?
Apr 16, 2020 Raina Oberoi , Abhishek Gupta , Jean-Maurice LadureEmerging Markets , Factor Indexes , Factor Investing , Factors , Global Investing
Learn MoreWhether investors include a tactical approach or invest strategically for the long term, diversifying across factors, sectors and geographies has historically played an important role in portfolio construction.
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Green bonds: Growing bigger and broader
Apr 14, 2020 Meghna MehtaESG Research , Fixed Income , Global Investing
Learn MoreAs the green-bond market matures, it is developing offshoots. The types of projects financed, as well as the emergence of innovative types of bonds and loans linked to the ESG targets, is growing. These initiatives may broaden the market for green investment options.
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Will coronavirus reduce emissions long term?
Apr 3, 2020 Oliver Marchand , Nathan FaigleESG Research , Global Investing
Learn MoreHas COVID-19 affected carbon emissions? Using satellite imagery from NASA and the European Space Agency, we examined the empirical data so far to understand the potential impact, and if there may be a decline in global greenhouse-gas emissions in 2020.
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Asset allocation and index futures during market crises
Mar 25, 2020 Zhen Wei , Shuo Xu , Wei XuEmerging Markets , Global Investing , Risk Management
Learn MoreDuring market crises, institutional investors have employed derivatives contracts to hedge market risks or express views on certain performance/risk characteristics. We explore prior use of futures for exposure management and tactical asset allocation.
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How coronavirus could hurt Chinese consumer ABS
Mar 20, 2020 Jian Chen , Yini YangRisk Management , Global Investing , Fixed Income , Emerging Markets
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Integrating ESG in emerging markets and Asia
Mar 18, 2020 Zhen WeiESG Research , Emerging Markets , Global Investing
Learn MorePreviously, we have examined the relationship between ESG characteristics and financial performance in developed markets. In this blog post, we explore whether ESG characteristics have had financially significant effects in emerging markets and Asia.
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Coronavirus and oil hit equities — how low can we go?
Mar 12, 2020 Dimitris MelasRisk Management , Global Investing
Learn MoreWe compare the market turmoil sparked by the coronavirus pandemic with levels of volatility, drawdown and recovery after 9/11 and the global financial crisis (the two other similarly severe economic and market shocks of the last 20 years).
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The coronavirus market impact spreads globally
Mar 5, 2020 Jun Wang , Jay Yao , George BonneFactor Investing , Global Investing
Learn MoreFear of a coronavirus pandemic and ensuing economic impacts caused sharp drops in global markets after an initially mild response. We look at recent performance from a factor perspective and how quickly factor returns and volatility reverted in past crises.
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A coronavirus stress test for global markets
Mar 4, 2020 Thomas Verbraken , Chenlu Zhou , Juan SampieriFixed Income , Global Investing , Risk Management
Learn MoreAfter the coronavirus spread to multiple continents, markets recorded the worst week since the crisis. How much further could markets drop if epidemic turns into pandemic? Our stress test indicates room for further losses.
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ESG and the cost of capital
Feb 25, 2020 Ashish LodhESG Research , Global Investing , Emerging Markets
Learn MoreWe know a lot about the relationship between companies’ ESG characteristics and financial performance. But was there a correlation between ESG scores and cost of capital?
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The coronavirus epidemic: Implications for markets
Feb 12, 2020 Zhen Wei , Jun Wang , Thomas VerbrakenEconomic Exposure , Emerging Markets , Factor Investing , Fixed Income , Global Investing , Risk Management
Learn MoreThe toll from the coronavirus has been felt throughout societies, leading to repercussions on the global economy and financial markets. We examine investor impact through markets’ economic exposures to China and factors and by stress testing portfolios.
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Aramco IPO shows importance of timely index inclusion
Feb 4, 2020 Saurabh KatiyarEmerging Markets , Global Investing
Learn MoreSaudi Aramco’s IPO showed why single-country index providers may sometimes need to include companies (especially larger ones) outside of scheduled reviews, as they work to bridge gaps between a country’s equity index exposure and economic drivers.
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Private-capital funds enjoyed record inflows from 2014 to 2018, as asset owners sought high-returning assets that had low correlations to traditional public asset classes. Did private capital deliver?
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Trade deal broadened access to China’s nonperforming loans
Jan 29, 2020 Jian Chen , Yini YangRisk Management , Fixed Income , Global Investing , Emerging Markets
Learn MoreThe phase-one U.S.-China trade deal lets U.S. asset managers acquire nonperforming loans directly from Chinese banks. We assess the market’s characteristics, as investors face challenges estimating recovery rates and liquidation timing of these loans.
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Looking to the futures of emerging markets
Dec 11, 2019 Hitendra D VarsaniGlobal Investing , Risk Management , Economic Exposure , Emerging Markets
Learn MoreEmerging-market (EM) equities have delivered unique risk and return characteristics over the last 30 years. Are futures on EM stocks a liquid enough means to gain exposure during normal and stressed conditions?
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The emerging-market (EM) equity segment has evolved substantially during the two and a half years since MSCI announced the inclusion of China A shares in the MSCI Emerging Markets Index.
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Standards can establish a common language and provide clarity among market participants. We examine three to see how they can help evaluate returns, quantify factor exposures and measure the impact of changes in sector and industry trends.
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A default wave for Chinese consumer ABS?
Nov 18, 2019 Jian Chen , Yini YangEconomic Exposure , Emerging Markets , Fixed Income , Global Investing , Risk Management
Learn MoreThe default rate for auto loans in Chinese consumer asset-backed securities increased rapidly in recent months, and China may be moving toward a more borrower-friendly bankruptcy regime. Could this lead to even higher default rates?
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Have regional equity-market correlations risen?
Nov 15, 2019 Guido Giese , Roman Kouzmenko Learn MoreGlobal equity investors use regions as building blocks in asset allocation, typically segregating markets by how developed they are and by geography. Has globalization reduced the potential for geographical portfolio diversification?
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The state of global investing
Nov 12, 2019 Dimitris MelasEconomic Exposure , Emerging Markets , Global Investing
Learn MoreFinancial markets are inherently unpredictable, while structural forces such as shifts in monetary policy, trade conflicts and climate change compound the challenges facing investors. Read our analysis commissioned by Norway’s Ministry of Finance.
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Emerging market country allocation matters
Nov 6, 2019 Jean-Maurice LadureEmerging Markets , Global Investing , Economic Exposure
Learn MoreInvestors with strong convictions on emerging markets might consider an approach allowing tilts toward or away from specific themes, such as active allocation to single-country index-based funds. We explore considerations linked with this approach.
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Cyclicals vs. defensives: Did tariffs tip the scales?
Nov 5, 2019 Guillermo CanoEconomic Exposure , Emerging Markets , Global Investing
Learn MoreDid tariffs imposed by the U.S. and China in May trigger a shift to defensive from cyclical stocks? How did they affect different U.S. sectors and industry groups?
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Value investing is down. But is it out?
Oct 23, 2019 Anil Rao , Abhishek GuptaFactor Indexes , Factor Investing , Factors , Global Investing
Learn MoreValue stocks generally underperformed the broad U.S. equity market over the past decade — just as they did in the late 1990s. What drove that underperformance? Was it consistent globally? Within U.S. sectors?
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Stress testing US-China trade wars
Oct 22, 2019 Thomas Verbraken , Anikó MarázEmerging Markets , Fixed Income , Global Investing , Risk Management
Learn MoreAmid ongoing U.S.-China trade tension, we have updated our stress test to consider three scenarios for how the situation could unfold — and their impact on currency, bond and equity markets around the world.
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Chinese convertibles: Equities in fancy dress?
Oct 14, 2019 Gergely SzalkaEmerging Markets , Fixed Income , Global Investing , Models/Client Cases , Risk Management
Learn MoreChinese corporate bonds that convert to A shares display equity-like characteristics. But investors who view these securities as equities in disguise are overlooking the complexities of the asset class.
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Stress testing Brexit: Deal or no deal?
Oct 9, 2019 Anikó Maráz , Thomas VerbrakenGlobal Investing , Models/Client Cases , Risk Management
Learn MoreBrexit has roiled markets since U.K. voters chose “leave” in the June 2016 referendum. We used our stress-testing model to examine how markets could react to deal and no-deal scenarios.
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What’s the downside in real estate?
Oct 4, 2019 Bryan ReidReal Estate Investing , Global Investing
Learn MoreReal estate has always been marked by periods of expansion and sometimes painful corrections. But all cycles are not alike.
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Is climate-change risk all about fossil fuels? Think again.
Sep 19, 2019 Michael DisabatoESG Research , Global Investing
Learn MoreWhen it comes to reducing greenhouse gases, investors tend to focus on fossil fuels and power generation. But other companies also need to adapt to a lower-carbon world. We look at the implications for five types of companies.
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Real estate may be yielding less than you thought
Sep 12, 2019 Bryan ReidGlobal Investing , Real Estate Investing
Learn MoreIncome has long been an important part of real estate returns meaning yields are often heavily scrutinized by investors. However, headline yields do not factor in capital expenditure requirements which can vary significantly. Investors looking to better understand potential “free cash flow” positions of portfolios post-capex may want to adjust the yields they use to account for it.
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Using multi-country multi-currency futures in portfolio management
Sep 3, 2019 Hitendra D VarsaniGlobal Investing , Risk Management
Learn MoreInvestors seeking to more tightly manage their exposures to regional or global benchmarks are turning to multi-country multi-currency futures.
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The changing face of real estate portfolios
Aug 14, 2019 Bryan ReidGlobal Investing , Real Estate Investing
Learn MoreOffice and retail investments’ historic dominance of commercial real estate portfolios is decreasing, with other property types — including logistics centers, student housing, and data centers — increasing. This evolution highlights how technology and the search for yield have led investors to diversify and seek exposure to other property types.
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Home bias in fixed income: Has it helped or hurt?
Jul 29, 2019 Anikó Maráz , Andy SparksFixed Income , Global Investing , Integrated Risk Management
Learn MoreHas global diversification historically helped reduce risk in the fixed-income portfolios of U.S. defined-benefit (DB) pension plans? Our backtests show that globalizing bond allocations would have increased risk measured relative to a liability benchmark. For such plans, home bias in bond portfolios would have reduced active risk over the period of our study.
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Is there another Woodford waiting to happen?
Jul 11, 2019 Laszlo HolloGlobal Investing , Risk Management
Learn MoreWhen the Woodford Equity Income Fund suspended redemptions on June 3, 2019, it showed how, when a fund’s liquidity profile is misaligned with its shareholder profile and redemption constraints, a single large redemption request can trigger gating.
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Under the hood: Rating ESG funds
Jul 10, 2019 Michael DisabatoESG Research , Global Investing
Learn MoreNearly $31 trillion in assets under management were invested in funds that consider ESG issues in their investing process as of January 2018, a 34% increase from two years previously. Transparency is key to understanding what this expansion means.
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Asian retail resilience: Have store hours affected performance?
Jul 9, 2019 Bryan ReidReal Estate Investing , Global Investing
Learn MoreIndustrial real estate has outperformed retail assets in recent years, but the trend has been less pronounced in Asia, where store hours, among other reasons, might have led to more resilient retail performance.
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The rise of fundamental factors in China A shares
Jun 6, 2019 Oleg RubanEmerging Markets , Factor Investing , Global Investing
Learn MoreCommonly held perceptions about China A shares have influenced investors to think factor strategies may not work in the Chinese equity markets. Our research suggests this may be changing.
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What could stress emerging markets?
May 24, 2019 Thomas VerbrakenGlobal Investing , Risk Management , Economic Exposure , Emerging Markets
Learn MoreEmerging-market equities and USD-denominated EM sovereign bonds started 2019 with a bang, but recent market turbulence caused by the U.S.-China trade standoff raises a pressing question: What could trigger the next EM downturn?
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Beyond headlines: How markets responded to US-China trade talks
May 9, 2019 Zhen WeiEconomic Exposure , Emerging Markets , Global Investing
Learn MoreOur analysis suggests that changes in equity-market valuations, analysts’ consensus earnings estimates and data on companies’ revenue exposure are metrics that provided insight into recent market and sector performances.
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Game of Homes: Is winter coming for the domestic-equity bias?
Apr 30, 2019 Anil Rao , Raman Aylur SubramanianEquity Themes , Models/Client Cases , Global Investing
Learn MoreCan we quantify home-bias risk in an allocation? And, what has happened when U.S. stocks ended previous multiyear runs of outperformance?
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The Right Tool: How Suitable is Your Real Estate Benchmark?
Apr 11, 2019 Amit NihalaniReal Estate Investing , Global Investing
Learn MoreYou don’t have to be a master craftsman to appreciate the benefits of using the right tool for the job. Even the most casual do-it-yourselfer has experienced the frustration of using the wrong screwdriver for a particular job — one that doesn’t quite fit the screw properly and shreds the head, leaving it uselessly stuck in the wood without fixing anything.
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Evaluating the impact of LIBOR fallback
Apr 3, 2019 Maks OksFixed Income , Global Investing , Integrated Risk Management
Learn MoreThe planned discontinuation of LIBOR and other interbank offer rates sometime in 2022 will affect a large number of existing financial contracts based on these benchmarks.
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Factors in Focus: Risky start. Quality finish.
Apr 2, 2019 Hitendra D Varsani , Waman VirgaonkarFactors , Global Investing , Factor Investing
Learn MoreWe highlight the fast-moving rotation among factors that continued during Q1 2019. As we move into Q2 2019, this framework showed allocation changes in different factors.
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Saudi Arabia inclusion and emerging markets
Mar 28, 2019 Saurabh KatiyarEquity Themes , Emerging Markets , Global Investing
Learn MoreSaudi Arabian stocks will be included in the MSCI Emerging Markets Index and the MSCI ACWI Index in a two-step process starting in June this year. With the first step of inclusion of the MSCI Saudi Arabian Index coming shortly, we ask how inclusion of this Middle Eastern market would have affected the MSCI EM Indexes.
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A new day for monetary policy?
Mar 22, 2019 Andy SparksEmerging Markets , Fixed Income , Global Investing
Learn MoreListen as MSCI’s Andy Sparks discusses potential implications of the US Federal Reserve’s sharply softening monetary policy, and whether the role of central banks has changed.
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Don’t confuse capital growth and asset-value growth
Mar 21, 2019 Niel HarmseEconomic Exposure , Real Estate Investing , Global Investing
Learn MoreMeasuring real estate growth is not a simple exercise; we run through it highlighting some common confusions
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Watching beta in volatile equity markets
Mar 12, 2019 Anil RaoEquity Themes , Global Investing
Learn MoreThe U.S. equity market ended last year with a historic drawdown, and beta stood out as a driver of the market decline. But what happened when those losses starting reversing in early 2019?
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What innovative companies and women on boards have in common
Mar 8, 2019 Meggin Thwing EastmanESG Research , Global Investing
Learn MoreWe examined constituents of the MSCI ACWI Index that had been recognized as innovators on one or more annual lists produced by Forbes, Fast Company, MIT Sloan and the Boston Consulting Group between 2015 and 2018.
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Brexit, Black Wednesday and Real Estate's Currency Risk
Feb 25, 2019 Niel HarmseReal Estate Investing , Global Investing
Learn MoreWhen investors buy overseas real estate, they inevitably take on foreign-exchange exposure. The resulting currency-market dislocations resulted in near-term losses for some investors, but also created attractive opportunities for investors to buy real estate exposure in the U.K.
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Evaluating Emerging-Market Stocks through a Governance Lens
Feb 21, 2019 Raina Oberoi , Anil RaoEquity Themes , Emerging Markets , Global Investing
Learn MoreEmerging-market stocks generally are perceived to have lower governance standards than their developed-market counterparts. Less transparency is one factor behind this view. Some emerging-market companies may also disadvantage minority shareholders. How can active and index-based investors address these issues?
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Venezuela and the Specter of Recovery Risk
Feb 14, 2019 Hamed Faquiryan , Manuel RuedaFixed Income , Global Investing , Factor Investing
Learn MoreVenezuela unfortunately finds itself on the verge of political and economic collapse. From the perspective of investors in the country’s sovereign and corporate bonds, recovery risk is now likely a bigger consideration than default risk.
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2019 emerging real estate trends
Feb 5, 2019 Will RobsonESG Research , Real Estate Investing , Global Investing
Learn MoreFor real estate investors, 2019 may be a year of adjusting to rapid changes arising from a variety of sources, including environmental, social and governance-related (ESG) risks; geopolitical uncertainty; and disruptive technology.
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What would a “No deal” Brexit mean for markets?
Jan 17, 2019 Thomas VerbrakenGlobal Investing , Integrated Risk Management
Learn MoreFinancial markets are increasingly edgy about prospects for the U.K. Parliament’s expected Dec. 11 vote on a Brexit deal with the European Union.
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Brexit and the risks of home bias
Jan 11, 2019 Jean-Maurice LadureEconomic Exposure , Global Investing
Learn MoreEvery so often, a country can be hit by a negative event — a tidal wave, a terrorist attack, a political uproar.
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Factors in Focus: Navigating turbulent markets
Jan 8, 2019 Hitendra D Varsani , Vipul JainFactors , Global Investing , Factor Investing
Learn MoreIn this inaugural Factors in Focus, we highlight the fast-moving rotation among factors that may have impacted investor portfolios during 2018, and we look to indications from our adaptive multi-factor framework. As 2019 began, this framework showed an overweight allocation to minimum volatility and quality, an underweight allocation to value, low size and momentum, and a neutral position on high dividend yield relative to a six-factor equally-weighted mix.
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What it may mean for Japanese stocks if easy money ends
Nov 22, 2018 Naoya NishimuraModels/Client Cases , Global Investing , Factor Investing
Learn MoreSome observers are concerned that when the Bank of Japan (BOJ) eventually ends its ultra-easy monetary policy, it could hurt the Japanese stock market. Part of this concern stems from the fact that the BOJ’s unconventional monetary policy involves purchasing Japanese exchange-traded funds (ETFs).
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Small cap allocations may not be that straightforward
Nov 20, 2018 Abhishek GuptaGlobal Investing , Factor Investing
Learn MoreThe low size factor, or the premium that has been historically realized by investing in smaller sized companies over longer time periods, forms an integral component of many institutional portfolios. However, investors can choose different ways to making a low size allocation.
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Sector investing in China
Nov 14, 2018 Anil RaoEmerging Markets , Global Investing , Factor Investing
Learn MoreAs the China A shares market has evolved, investors have faced new choices. They can continue with broad allocations to the emerging markets (EM), choose slightly narrower allocations to China and other specific EM countries or consider targeted investments within China through a variety of means.
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Which factors mattered in China?
Nov 7, 2018 Oleg RubanModels/Client Cases , Global Investing , Factor Investing
Learn MoreChinese equity prices have hardly been music to investors’ ears so far in 2018. The MSCI China A Onshore IMI Index — the broadest MSCI A shares index designed to represent the performance of the overall A shares market — has declined more than 25% in local currency terms through Oct. 31, 2018. Were there factors in this market that outperformed?
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Apples vs. Oranges? Core vs. Opportunistic Real Estate Funds
Oct 25, 2018 Amit NihalaniReal Estate Investing , Risk Management , Global Investing
Learn MoreReal estate investors sometimes treat core and opportunistic funds as if they were different asset classes. They are measured against different benchmarks and comparisons are limited by a lack of consistent data. But a comparison of the two shows that both core and opportunistic funds have similar return profiles — it’s the magnitude of their returns that has varied over time.
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How the low volatility factor has performed in China A shares
Oct 11, 2018 Zhen WeiGlobal Investing , Factor Investing
Learn MoreWhich factors have performed best in the China A market, especially given its relatively high annualized market volatility? Is there too much risk to bear? We investigate the role that the minimum volatility factor has played.
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China A shares: The journey continues
Oct 10, 2018 Chin Ping ChiaEmerging Markets , Global Investing
Learn MoreAs China continues to open its capital markets to global investors and accessibility standards have improved, MSCI recently launched a consultation to explore increasing the weight of A shares in the MSCI Emerging Markets Index. Ultimately, we seek to reflect the full investable opportunity set — all of China accessible to global investors — in the benchmark, as we do in all MSCI Global Investable Market Indexes.
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Corporate disclosure in a TCFD world
Sep 24, 2018 Laura NishikawaESG Research , Global Investing
Learn MoreIn June of 2017, the Task Force on Climate-related Financial Disclosure (TCFD) released climate-related disclosure recommendations to companies and investors that included a framework for better company disclosure and a request for climate scenarios as part of that disclosure. But for investors looking to incorporate environmental risk into their process, there might be a pretty big catch: We mapped over 140 MSCI ESG Research climate-related data points to the TCFD framework and found a significant gap between what investors need to know under these recommendations and what companies are telling them.
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Global real estate: To hedge, or not to hedge
Sep 12, 2018 Will Robson , Bryan ReidReal Estate Investing , Risk Management , Global Investing
Learn MoreWhile not quite as profound as the Shakespearean original, it is still quite a tricky one for real estate investors to grapple with. Until fairly recently, it is one that has been avoided by the majority of real estate investors due to their heavy home bias. But the increasing global nature of the asset class, combined with rising currency volatility, means the question is becoming increasingly difficult to avoid.
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Does Turkey offer lessons for managing emerging-market currency volatility?
Aug 15, 2018 Raman Aylur SubramanianEmerging Markets , Global Investing
Learn MoreThe recent 40% drop in the Turkish lira is part of a long-term trend of rising emerging-market currency volatility. Typically, investors do not hedge this exposure. Is it time to reconsider this approach?
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Is Japan’s “lost decade” over?
Aug 14, 2018 Naoya NishimuraEquity Themes , Global Investing
Learn MoreThe Japanese equity market’s spectacular crash in the early 1990s is referred to as the “lost decade.” Recently, this period has been extended to include the decade that followed. Despite this, most Japanese investors continue to favor an outsized domestic equity allocation. This home bias has come with a huge opportunity cost. Since the end of 1987, the cumulative return of global stocks was over 1,400% in yen terms, while the cumulative return of Japanese stocks was only 49%.
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What happens if Italy leaves the EU?
Aug 6, 2018 Thomas VerbrakenModels/Client Cases , Global Investing , Integrated Risk Management
Learn MoreWith populist policies on the rise, globally, many believe Italy’s coalition government could add to the EU’s challenges by pursuing populist strategies that could further disrupt both equity and bond markets. We consider two scenarios – a severe and mild one – with very different implications.
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Can investors win a U.S.-China trade war?
Jul 3, 2018 Anil RaoEquity Themes , Economic Exposure , Global Investing , Integrated Risk Management
Learn MoreWith new tariffs in effect as of July 6, we investigate our earlier assertion that “while an expanded trade war could lead to a ‘lose-lose’ outcome, there could be greater impact for stocks in the U.S. Overall, they are more exposed to the Chinese economy than the other way around.”
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Can your investment strategy work with China A shares?
Jun 27, 2018 Zhen WeiGlobal Investing , Factor Investing
Learn MoreMany institutional investors have long viewed China A shares as an inefficient market, suggesting that active strategies such as stock-picking can thrive. However, researching a universe of over 3,500 stocks comes with huge challenges, and may lead investors to question whether factor-based systematic strategies could have worked well with China A shares.
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Investors eager to write the obituary of the size premium might want to put down their pens. Small-cap stocks in developed markets outside the U.S. have been on a decade-long run of outpacing their large- and mid-cap counterparts.
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Adam Smith’s “invisible hand” and the value of benchmarks
May 30, 2018 Sebastien Lieblich Learn MoreToday, there are indexes designed to represent the performance of a wide range of investment segments, including market capitalization, geography, industry and, most recently, factors. They also are used as the basis for financial products, such as exchange-traded funds or derivatives. Much like Adam Smith’s “invisible hand,” they play a critical, behind-the-scenes role, reflecting the entire market’s views on valuations, rather than those of any individual or group of individuals.
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