Splitting global equity markets across two dimensions — level of development and geographical position — resulted in natural local-return correlation clusters.

MSCI Research looked at average pairwise correlation between countries’ USD returns within developed and emerging markets (EM) for the last 20 years. 

Global benchmarks can understate the economic importance of emerging markets but looking at the evolution of the MSCI Emerging Markets Index and its weight in the ACWI, is a testament to the important role EM plays in global asset allocation.

Three-quarters of the USD 1.5 trillion in revenue from clean tech for MSCI ACWI constituents came from outside North America. 

More companies in emerging markets were in line (“strongly aligned” or “aligned”) with many of the UN Sustainable Development Goals (SDGs) than firms in North America, as measured by the MSCI SDG dataset.

Thematic investing aims to help investors benefit from long-term structural, transformative trends.

MSCI Research has shown that dividends and earnings growth were principal drivers of equity returns, particularly in the long run.

Corporate and government spending on research and development (R&D) accounted for about 2% of GDP globally, as of December 2018, with wide variation across individual countries.

Although companies outside North America accounted for less than 40% of global equity market capitalization they captured almost 70% of the global revenues within the MSCI ACWI Index.

Investing globally can help investors work toward global diversification, tap into new opportunities for growth and harness the potential in the rise in importance of emerging markets. But many investors may be missing out on these opportunities