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The Fund-Name Challenge: Matching Investor Needs and Supervisory Expectations 

To adhere to ESMA’s fund-naming guidelines, sustainability-minded fund managers may have to choose between fund name and preferred investment strategy. Our analysis shows that almost 11% of MSCI ACWI IMI constituents by weight could become ineligible investments for such funds.

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High Short Interest and Low Quality Hurt Small Caps’ Performance 

The small-size premium has declined over the last five years, with market dynamics, deglobalization and inflationary pressures playing contributing roles — a trend that has continued into 2024. We analyze the small-cap space across regions. 

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Evaluating Chinese Equities’ Performance After Stimulus 

Global institutional investors in Chinese equities, either using fundamental or quantitative approaches, may find potential opportunities in sector rotation and in factors’ deviations from their long-term patterns.

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Markets in Focus: Rate Cuts Ripple Through Export-Oriented Markets 

Interest-rate uncertainty and restructured trade networks are drawing attention to export-oriented markets. MSCI’s equity models, using foreign-sensitivity exposures, have highlighted wide differences in exporter firms’ performance across regions.  

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Macro Scenarios in Focus: Hard-Landing Risks Keep Investors on Edge 

After the Federal Reserve recently cut rates and indicated that further reductions were likely, the equity market rallied. But sell-offs in August and September signaled investor concerns about an economic slowdown. What are potential outcomes to consider? 

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Managing Climate-Change Risks vs. Chasing Green Opportunities — What Works? 

Companies with high climate-change risk scores have consistently outperformed, underscoring the value of integrating carbon data into equity analysis. Incorporating environmental opportunities into portfolios has been less straightforward, though the outlook is more optimistic.  

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Key Takeaways from MSCI’s Climate Week NYC Conversation on Carbon Markets 

Carbon-credit users typically outperform non-users in disclosing and reducing their emissions, setting targets and investing in low-carbon technologies, while integrity in carbon markets is also improving — key takeaways from MSCI’s Climate Week NYC event.  

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Key Takeaways from MSCI’s Climate Week NYC Conversation on the Low-Carbon Transition 

Location and granularity may be the new mantra in assessing climate-related physical risk, while private assets and AI have a growing role in the decarbonization — key takeaways from MSCI’s Climate Week NYC event on “Financial Frontiers: Climate Strategies and Transition Frameworks.”

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Private Capital in Focus: Q2 Returns and an Exploration of Holding Periods 

Distributions and holding periods in private markets remain key considerations for assets owners. We examine the trends and also summarize the performance of major asset classes in Q2 2024. 

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It’s Getting Hot in Here: Assessing the Risks of Extreme Heat in the US 

Chronic heat is causing stress on workers and driving the need for adaptations to current working conditions. Using geospatial intelligence, we assess the potential impact of heat at the asset level for U.S. constituents of the MSCI ACWI Investable Market Index. 

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Olive Is the New Black: The Rise of Transition Funds 

Expanding opportunity and a supportive policy environment suggest transition funds may continue to grow. While no one can be certain, understanding the market can help investors determine the best way forward, and how they can work to stand out.  

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A Silver Lining for Climate-Tilted Bond Portfolios? 

Some sovereign-bond investors seeking to support climate mitigation might be interested in the idea of increasing their exposure to issuers with lower carbon emissions. Would this have been a good approach? 

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Navigating the Financial Risks of Flooding 

Assessing the widespread exposure and varying characteristics of coastal, fluvial and pluvial flooding is imperative for financial institutions to understand and manage the potential financial impacts of different flood types. 

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Understanding Geopolitical Risk in Investments 

Over the last 30 years, high geopolitical risk has been associated with lower equity returns and higher forecast volatilities. We show that measures of geopolitical risk have provided useful information beyond conventional measures of uncertainty. 

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What Can Capex Reveal About Emissions Reductions? 

We explore the crucial role of capital expenditure in meeting climate targets and show why investors need to look beyond just emissions trends to forecast a company’s dedication to a sustainable future. 

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What If Bond Issuers Don’t Meet Their Emissions-Reduction Targets? 

Bond investors evaluating their decarbonization targets may want to consider different scenarios for projected carbon emissions of companies in their portfolios. We assessed three scenarios’ impact on portfolios aiming for different decarbonization levels by 2030. 

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Who’s the Climate Expert on Board? 

What’s the state of climate expertise on the boards of the companies in your portfolio? We provide a regional analysis and offer a framework to help investors make their own assessments. 

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Real Estate in Focus: Signs of Recovery After the Shocks 

The second quarter provided glimmers of hope that the downturn in global commercial real estate is nearing its end. We discuss our latest findings on deal activity and pricing. 

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Renewable-Energy Carbon Credits Losing Steam 

The ICVCM’s recent decision to reject renewable-energy projects from its high-integrity label reinforces MSCI’s own integrity analysis of this project type. What could this mean for the future of renewable energy in the carbon-credit market?

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Have US Buyout Funds Delivered on a Risk-Adjusted Basis? 

Private equity outperformed public equity from 2014 to 2023. But discussing performance without considering risk does not provide a full picture for informed asset allocation. We look at three measures of risk-adjusted returns.

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Social Risks and Opportunities for Corporates: Long-Term Performance in Global Equity Markets 

What goes into an analysis of financially material social risks and opportunities? And what does it mean for a company’s market performance? Our analysis found that scoring on social-risk themes was a key indicator of performance. 

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As Fed Rate Hopes Shift, So Too Does Real-Estate Sentiment 

Real estate has been rocked by a rapid rise in interest rates that has stymied deal activity and put downward pressure on asset values. If the Fed lowers rates, will it raise investors’ spirits? Or is this a case of “be careful what you wish for?” 

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Scenario Analysis: How Could a Credit Crisis Affect Portfolios? 

We examine a scenario for how a sudden disruption in credit markets could affect portfolios, especially given indications of the market’s fragility.  

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"GPT-4, Write a Blog Post About Director Skills and AI" 

Board expertise is one lens through which investors can scrutinize companies’ efforts to manage the risks and opportunities of AI, but just how expert in AI are these directors? We use GPT-4 to find out. 

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Corporate Governance: Market Matters 

Good governance is foundational to effective capital markets, promoting accountability, transparency and sound decision-making aligned with investor interests. But how do those potential benefits translate into market performance? 

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Markets in Focus: Currency Risk Higher for Global Equity Investors 

Currency relationships have been in flux since early 2022. We analyze how these changes have impacted global equities and outline the economic and political events that could influence fixed-income performance over the balance of 2024. 

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The Cornerstones of Benchmarking Private Capital 

Indexes can provide vital benchmarks for investors navigating private markets, a significant but relatively opaque investment ecosystem. We explain the hallmarks of building a foundational dataset and creating indexes that are reliable and robust. 

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India’s Changed — and Changing — Equity Markets 

We segmented India’s public equity market to study patterns in its factor, thematic and industry exposures. And to assess how the current market profile could change, we also analyzed private firms that may be in the pipeline to become public. 

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Japan Goes for Growth to Support Nature-Based Projects 

Developing countries have increasingly looked to carbon markets for conservation finance. But the biodiversity financing gap remains wide. Could Japan’s expansion of its Joint Credit Mechanism into nature-based projects help address this problem?  

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Could July 4 Elections Light Up UK Equities? 

Post-election U.K. market surprises seem unlikely, but both major political parties’ manifestos are placing AI and energy in the spotlight. 

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Sustainability and Climate in Focus: Momentum and Magnificent Seven Tipped the Balance 

Performance of the MSCI ACWI ESG and Climate Indexes was a mixed bag over the first five months of 2024, but exposures to momentum, information technology and the Magnificent Seven were important contributors to positive returns.  

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Different, Not Diverging: Aligning Temperature-Alignment Metrics 

Investors with climate objectives may rely on temperature-alignment metrics to set goals and track progress. We compare the MSCI Implied Temperature Rise with the metrics from the Science Based Targets initiative to assess their correlation. 

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Private Capital in Focus: Q1 Performance and a Dive into Distributions 

We summarize the performance of major asset classes based on the latest update of MSCI’s private-funds data universe and explore trends in distributions — a key concern for asset owners.  

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Saudi Equities — Five-Year Milestone and the Road Ahead 

Since inclusion in the MSCI Emerging Markets Index in 2019, the Saudi equity market has evolved, offering an expanded and more diversified opportunity set. Vision 2030 has the potential to build on this progress, but risks and challenges remain.

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MSCI’s 2024 Capital for Climate Action EMEA Conference: Key Takeaways 

Climate is no longer just a risk for the future but also an opportunity to invest now, stressed speakers at our Capital for Climate Action EMEA Conference, which brought together investors and financial institutions to discuss the importance of investment and finance in speeding the low-carbon transition.

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The First Core Carbon Principles-Qualifying Projects — the VCM Steps on the Gas 

The Integrity Council for the Voluntary Carbon Market has announced the first set of projects that qualify for its Core Carbon Principles, marking a major milestone for the voluntary carbon market and one that could pave the way for a bifurcated market. 

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Identity Check — ESMA’s New Name Guidelines for ESG and Sustainability-Related Funds 

ESMA’s new fund-naming guidelines could impact one in three SFDR Article 8 and 9 funds, necessitating name changes or adherence to new investment thresholds and fossil-fuel exclusions for compliance. 

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MSCI’s 2024 Capital for Climate Action APAC Conference: Key Takeaways 

At our recent APAC climate conference, which brought investors, companies and financial institutions together, discussion focused on financing decarbonization, the usefulness of looking beyond emissions and the development of biodiversity metrics. 

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Tracking the Internationalization of Chinese Companies 

Outbound investment from China has grown steadily in recent years, and Chinese companies with the highest exposure to international revenue sources have outperformed the broader China market.

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Investors Are Watching the EU Elections 

The 2024 European parliamentary elections could mark a shift in the EU's political landscape, potentially impacting key policies such as the European Economic Security Strategy and the European Green Deal.  

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Transparency Is King When Using Carbon Credits 

Although transparency around the use of carbon credits is improving, variations in rules across jurisdictions can add complexity and an extra reporting burden for companies, and make it harder for investors to report on credit use across their portfolio. 

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High Speeds in Slow Lanes: A Deep Dive into Ginnie Mae VA Loans 

Despite the recent pause in the Federal Reserve’s aggressive monetary tightening, rates remain at their current high level and refinance risk has emerged in Ginnie Mae securities made up of loans backed by the U.S. Department of Veterans Affairs. 

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IRA Boosts US Utilities’ Plans to Grow Renewables and Storage 

U.S. utilities are increasing investments in solar, wind and battery installations. Investors can learn more about a company’s transition strategy from these energy-generation plans than from tracking past performance on emissions. 

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Revenge of the Appraiser: The Power of Valuations 

Getting a read on price change during a deal drought is paramount for commercial-property investors. Can valuation-based indexes buttress transaction-based gauges of pricing in turbulent times? 

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Real Assets in Focus: Are We Nearly There Yet? 

Investors are still waiting for a recovery in commercial real estate. We outline the state of play in early 2024 and identify potential signposts for an upturn in the asset class.  

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Can Crowding Scores Quantify US Stocks’ Fragility? 

Instead of a predicted recession, U.S. equity markets have soared since 2022, and a few mega-cap technology stocks dominated the market. We analyze the most- and least-crowded market segments to help investors prudently monitor their portfolios. 

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Factor and Sector Behavior Across Macro Regimes 

Over the last nearly 50 years, changes in interest rates have had a more pronounced impact on the performance of factor and sector indexes than the rate level itself. Insights from these findings may be helpful in realigning portfolios to a shifting macro view. 

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Bridging Greenhouse to Greenbacks: Renewables’ Returns in Private Funds 

In recent years, there has been a notable shift in private investments in energy. Understanding these trends and the financial side of renewable investments may be key for investors looking to allocate private money to energy-transition opportunities. 

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Climate Glidepaths for Energy Portfolios 

Sustainable investing often necessitates reducing portfolio emissions. But adding emission-reduction targets requires a careful navigation of market complexities and risk considerations alongside sustainability objectives. Could using a climate glidepath help? 

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Long-Term Performance of MSCI ESG Ratings in APAC Equity Markets 

Over the long term, companies with higher MSCI ESG Ratings have outperformed in the Asia Pacific equity markets. Among the three pillars, governance demonstrated the highest outperformance, followed by the social and environmental pillars. 

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Markets in Focus: Regional Markets, Credit and Cash on the Move 

Investors contemplating putting their cash to work over the balance of 2024 may wish to consider the impacts of the changing equity-credit relationship and growing regional disparities as they revise their allocations. 

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Macro Scenarios in Focus: Are US Markets Priced for Perfection? 

Global forecasters have recently suggested that the world economy is headed for a soft landing. Our latest market stress test looks at how this and other, less benign scenarios could affect a multi-asset-class portfolio in the coming months. 

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Are Audit Firms Spread Too Thin? 

The auditing industry is facing several challenges, including fee concentration and a decline in practicing accountants. We assess the current state of play to identify potential areas of concern and the impact these could have on investors.

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Indian Firms Advance in Financially Pertinent Sustainability Risks 

Indian firms have made notable strides in managing their financially relevant sustainability risks over the last five years. Understanding their progress could offer valuable insights to investors in India’s equity market.    

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Investor Pressure May Help APAC Companies Minimize Asset-Stranding Risk 

A managed coal phaseout could help power generators reduce asset-stranding risk and help countries achieve their decarbonization targets. What might this mean for utilities companies and why might active engagement be the way forward for investors? 

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Beyond the Name Game: Focus on Fundamentals 

Name recognition of highflying stocks, as well as their performance, can be brief. The enduring value of thematic and fundamental analysis is the ability to uncover the macroeconomic and business dynamics that influence long-term stock returns.  

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In the Name of Climate: Private vs. Public Funds 

In recent years, there has been a surge in climate-related names within both public and private funds, but their focus is often on different areas. We analyze the numbers to identify key trends and provide investors with greater clarity.

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日本の企業改革は株主価値を引き出したか？ 

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Have Corporate Reforms in Japan Unlocked Shareholder Value? 

Regulatory reform has been one of the forces boosting the Japanese equity market’s performance over the last two years — but capital efficiency and margins still disappoint. Improving these metrics may be key to further improvement in the market.  

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Long-Term Performance of MSCI ESG Ratings in European Equity Markets 

Based on a quintile analysis for MSCI ESG Ratings for the MSCI Europe Index, we found that companies in the highest quintile have consistently outperformed those in the lowest quintile since 2013, when these ratings were first introduced. 

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What the SEC’s New Climate Disclosure Rules Could Mean for Companies and Investors 

The Securities and Exchange Commission (SEC) have finally unveiled their plans for climate-related disclosures. The rules may create more transparency for investors and help narrow the disclosure gap between the U.S. and other developed markets.  

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Going Where the Talent Is 

Having the right mix of skills, experience and perspectives at the top could make the difference between companies getting ahead or falling behind. In our analysis of diversity across boards, c-suites and executive teams, “diverse leadership” has begun to emerge. 

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ESG and Climate In Focus: 2023 Index Performance Review 

A bright spot in an often-tumultuous 2023 was the ability of the MSCI ESG and Climate Indexes to meet or exceed their stated objectives, which ranged from maximizing ESG score to reducing carbon emissions.  

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Mexico: A Hot Spot for ‘Shoring’ 

Mexico’s strong economic ties and geographic proximity to the U.S. are helping make it a top global destination for U.S. and other foreign companies’ new and relocated industrial operations, as well as strengthening many of its domestic companies.  

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Outlook for the Global Biochar Market 

We consider the outlook for the global biochar market, highlighting the increased demand for biochar carbon credits. What are biochar’s potential benefits and challenges in carbon removal, economic implications and role in global markets? 

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One Size Does Not Fit All in the Office Market 

Prices have fallen sharply for the U.S. office market, but it would be a mistake to assume that all assets face the same challenges. We examine where buyers and sellers sit on pricing to estimate the extent of owners’ potential losses. 

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EAFE ADRs vs. Shares: How Do They Compare in Tax Efficiency? 

Wealth managers, interested in adding EAFE equity exposure to a U.S. client’s portfolio but concerned about the potential tax implications? We compared the tax efficiency of EAFE ADRs and shares of the underlying securities.  

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Is Greenium Evaporating in USD Corporate Bonds? 

With the market for sustainable (or labeled) bonds growing rapidly, we assessed their value relative to conventional bonds and found they consistently exhibited a green premium, or “greenium,” though it did diminish over time.

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Real Assets in Focus: Grappling with Higher Interest Rates 

A rapid rise in interest rates globally rocked the commercial-property market in 2023. We chart the impact on pricing and transaction activity, and discuss what could aid a revival in dealmaking.

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What’s Been Driving the Carbon Footprint of the MSCI Climate Action Indexes? 

We take a deep dive into the financed-emissions intensity of the MSCI Climate Action Indexes by isolating the effect of various decarbonization drivers to offer a comparative perspective against their parent indexes.

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Pulling Back the Curtain on Emissions Reporting in Private Markets 

With private investments set to play a major role in the transition toward net-zero, we assess the state of emissions reporting in private markets relative to public markets and identify the reporting disparities across asset classes, regions and sectors. 

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Sector Insights from India’s Equity Market 

A sector-based perspective of the Indian equity market, one of the emerging beneficiaries of global power shifts, indicates the valuation premiums of most sectors are high in historical terms and relative to sectors in other emerging markets.

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What Could Shape Sustainability and Climate Investing in 2024? 

MSCI’s Sustainability and Climate Trends to Watch 2024 explores key themes that could shape the world of ESG investing. Here we touch on three of them: extreme weather, the regulatory aspects of AI and investing in nature via the voluntary carbon market. 

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Inflating Returns with Subscription Lines of Credit 

The increased use of subscription lines of credit by general partners in some private-capital funds has lifted returns by squeezing the timeframe over which returns are calculated. We examine buyout, private-credit and real-estate funds to see where the greatest inflation lay.  

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China’s Role in Supply-Chain Strategies 

Are parts of the global supply chain more reliant on China than other parts? We explore which industries and themes may be more dependent on China from a manufacturing-ecosystem and raw-resources perspective.  

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Markets in Focus: Concentrating on Diversification 

Higher equity and bond correlation combined with increased index concentration suggest now is a good time to revisit allocations across regional, country, sector, style and thematic exposures for adequate portfolio diversification. 

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Macro Scenarios in Focus: Adapting to the New Normal 

Markets seem to be priced for a soft landing, in which inflation returns closer to target levels and recession is avoided. We also consider two potential downside-risk scenarios: a hard landing and a resurgence of inflation. 

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Why COP28 Underscores the Importance of Voluntary Carbon Markets 

Recent climate talks fell short of agreement on the international trading of carbon reductions that are seen as key to funding the global energy transition. We explain what has hampered progress and why voluntary carbon markets are leading the way. 

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2024 Trends to Watch in Real Assets 

After the market dislocation of 2023, investors will be hoping for a calmer 2024 in commercial real estate. We identify five key influences to help investors navigate the challenges and opportunities ahead.  

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Surveying the Medley of Sub Lines in Private Funds 

Visibility on the use of subscription lines of credit is of key importance to limited partners in private funds. We examined a selection of real-estate, venture-capital and buyout funds to note some key differences between and within private-capital strategies. 

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Verra’s New Methodology for Unplanned Deforestation Aims to Silence the Critics 

A newly launched methodology by Verra addresses many of the concerns regarding carbon credits from avoided deforestation projects (REDD+), and includes the introduction of jurisdictional baselines and a deforestation risk tool.

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The Climbing Costs to Insure US Commercial Real Estate 

Insurance costs as a share of income have doubled in the last five years, adding another challenge for property investors. We examine the trend and the variation across U.S. states.

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Emissions Exclusion in Private Equity: How Is Tracking Error Taking It? 

When it comes to climate investing in private equity, there’s more to negative screening than simple sector-wide exclusions. Our analysis underscores the value that incorporating carbon-based solutions can have on carbon footprint at the portfolio level. 

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Equity-Factor Commentary: A ‘Magnificent 7’ Factor? 

Would adding a Magnificent 7 factor have improved an equity factor model’s performance in the concentrated U.S. equity markets of the last few years? Our analysis shows that the model’s risk-forecast accuracy would not have materially increased.  

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How Canadian Asset Owners Are Seizing Investment Opportunities as Risks Evolve 

Attendees at the recent MSCI Canadian Institutional Investor Forum discussed and debated the challenges and opportunities created by massive structural, macroeconomic, societal and technological shifts in the investment landscape.

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Who Benefits from Rewiring Supply Chains? 

Certain industries are more susceptible to the effects of deglobalization. We explore how investors can identify potential beneficiaries of global supply-chain realignment considering industry, thematic and structural characteristics.

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Sustainable-Debt Issuers on a More Credible Decarbonization Path, but Is It Enough? 

Corporate decarbonization targets without capital commitments can lack credibility, and issuers of labeled corporate bonds led other bond issuers on climate targets. But just how well did these issuers perform in our assessment? 

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Using Derivatives to Scale China and Emerging Markets ex China 

China’s large share of emerging-market (EM) equities and its falling correlations with EM are leading some investors to allocate separately to the two universes. A tactical overlay of futures and swaps could be used to adjust regional exposures. 

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Assessing the Health of US Real Estate’s Loan Collateral 

How impactful will the coming wave of U.S. property-loan refinancing be? Two significant shifts have characterized the real-estate debt market over the past 18 months: a drop in property values and a corresponding change in the availability of debt financing. 

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Small Caps’ Big Story in China 

The China A shares market has grown rapidly, along with the number of small-cap stocks. We compare a market-cap-coverage approach to index construction vs. a fixed-number approach and find the former more consistently captured small-size exposure. 

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How Asset Owners Are Preparing for the New Era of Investing 

Key insights from the recent MSCI Institutional Investor Forum highlight how forces of disruption are driving asset owners to evolve their assessment of risks and how developments in AI can further blend quantitative and qualitative investment analysis.

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Human-Rights Due Diligence: Companies’ Preparedness for the EU’s CSDDD 

The EU’s proposed CSDDD could substantially up the stakes in human-rights law for companies and investors. Our research found that many of those in scope for CSDDD fell short on baseline practices to prevent human rights abuses. 

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The Eyes of the World Will be on the Petrostates at COP28 

The upcoming climate negotiations at COP28 could be a turning point for the affluent Gulf states. While these countries built their wealth from fossil fuels, they now face pressure to use that wealth to combat climate change. 

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Practical Considerations for Calculating Portfolios’ Carbon Footprint 

Measuring financed emissions is crucial for climate disclosure, but not always straightforward. Proper data alignment and timeliness are essential to help investors make informed decisions and contribute to effective climate action.

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The Futures of Singapore’s Equity Market 

We highlight key characteristics of the Singapore equity market and analyze the impact of foreign-listed securities in the MSCI Singapore Free Index. Investors may consider managing Singapore equity exposure using futures linked to the index. 

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Macro Scenarios in Focus: Higher Rates for Longer 

How could higher global rates for longer than expected affect a global portfolio of equities, bonds and real estate? In our new quarterly series, Macro Scenarios in Focus, we consider four potential paths for the global economy and conduct a portfolio stress test.

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Markets in Focus: Narrow Yield Spread and High Crowding Pressure Equities 

Equity Themes , Emerging Markets , Fixed Income , Factor Investing , Equity indexes

Eclipsing equity and bond yields and high crowding may be signs of a vulnerable equity market. We compare equity/bond yield spreads in the major regional markets along with crowding in sectors and regions.  

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EU Taxonomy Reporting Has Perplexed Issuers 

Although the EU Taxonomy is a pivotal framework for assessing sustainability in economic activities, it remains a source of confusion. Its correct interpretation will be key to ensure that data is properly disclosed and reporting obligations met.

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Biodiversity and Business: Are Companies Aware of Nature’s Risks? 

Although corporate disclosures around biodiversity- and nature-related risk vary, with growing stakeholder awareness and initiatives such as the TNFD framework, we may see a move toward more standardized disclosures that could help investors better assess these risks.

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What’s Been Driving the Carbon Footprint of MSCI’s ESG Indexes? 

We analyze the index-level carbon emissions of the MSCI ACWI, ACWI ESG and Socially Responsible Investing Indexes, in terms of both financed emissions and emissions intensities, to see what the trends are and what’s driving them.

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Potential Impact of the Core Carbon Principles on the Global Carbon Credit Market 

If eligibility for the Core Carbon Principles becomes a new benchmark for ‘acceptable’ quality, understanding the proportion of total credits today that are likely to gain CCP status is vital for projecting how the market might evolve. 

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Loss Aversion and Property-Market Liquidity 

Investors do not like to realize losses. We examine the link between this loss aversion — an observed phenomenon in commercial-property markets — and a drop in liquidity in key markets around the globe. 

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Biodiversity Funds:
Welcome to the Jungle 

Biodiversity is the new kid on the block in sustainable investing, and a lack of harmonization makes it a jungle out there. We assessed how biodiversity-labeled and biodiversity-related funds differed in sector and revenue exposure and performance. 

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Engagement Is a Powerful Force in Climate Action 

As the urgency of addressing climate change continues to grow, investor engagement could be key to holding companies accountable for their environmental impact and influencing corporate climate strategies and net-zero commitments. 

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The Potential Impact of El Niño on Sovereign Debt 

With a very strong likelihood of an El Niño event forming by the end of 2023, we take a look at the impact such events have had in the past on the debt-to-GDP ratios of global sovereigns and what this could mean for impact investors.  

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Better Incentives Could Quicken a Return to the Office 

Office vacancy has reached a record high for properties in central business districts. Forms of compensation to attract people back to offices could include improved mass transit and reduced travel time.  

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Nearshoring, Friendshoring and Reshoring: Heads Up to Equity Allocators 

Multinational corporations’ recent interest in reconfiguring their global supply chains and adopting “China-plus” manufacturing strategies has potential consequences for equity allocators, reaching across countries, sectors and themes.   

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Unearthing Real Estate Trends in Commodity Cities 

Cities that ride booms and busts in commodity prices have in the past achieved strong outperformance in commercial-property returns during booms. Has the recent surge in commodity prices had a similar impact on returns? 

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A Question of Balance(s) in Subscription Lines of Credit 

Amid the growing usage of sub lines across private capital funds, we explore how intensively funds draw on their sub lines — a critical determinant of how sub lines will affect internal rates of return.

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Trove Launches New VCM Country Opportunity and Risk Index 

Trove's new VCM Country Opportunity and Risk Index allows stakeholders to evaluate country-level risks for developing and investing in voluntary carbon projects, based on climate policies, regulations and political risk.

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Equity-Factor Commentary July 2023: Fireworks and Froth 

The risk-on market rally continued in July amid several indicators of frothiness as beta and residual volatility posted the highest factor returns in the U.S. by a wide margin and were also strong globally.

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The Scramble for African Carbon Credits — Should Governments Intervene? 

Host governments for carbon-credit projects are trying to ensure as much revenue as possible stays in the country and benefits the local communities. But the way they are going about it risks having the opposite effect.

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Do Not Fear the Impact of AI on Commercial Real Estate 

Worries about artificial intelligence supplanting knowledge workers have created more pain for the office market but a broader view of the impact on commercial real estate is vital. 

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Understanding the Drivers of Transition-Risk Climate VaR 

Climate stress-testing models like MSCI Climate VaR may be complex, but their main mechanisms can be explained using linear regression. This helps transform input variables into risk outputs, making it easier for investors to understand the primary drivers.  

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Insights from Past Concentrated Rallies and Thematic Opportunities 

The rally in the first half of 2023 shared some similarities, and had notable differences, with past concentrated rallies. In addition to AI, structural megatrends, such as the blockchain economy and robotics, helped drive the rally. 

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Student Housing: Passing Surge or Graduating to the Big Leagues? 

Student housing continues to evolve as a distinct asset type. The sector outperformed the rest of the U.K. residential sector as well as the retail and office sectors over the three, five and 10 years ending December 2022.

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From Greenhouses to Greenbacks: Does Negative Screening Impact the Returns of Private-Capital Portfolios? 

Approximately 26% of the financed emissions in private-equity and -debt funds are concentrated in the top 5% most carbon-intensive funds. How did excluding up to 20% of the most carbon-intensive funds affect returns? 

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AI’s Moment and Insights from Themes Past 

Enthusiasm for artificial intelligence has boosted the stock prices of many U.S. technology behemoths this year. How does the AI rally compare to previous market shifts, and what lessons might investors in today's largest firms learn from history? 

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Tracking Multi-Asset-Class Portfolios’ Emissions 

Our previous research discussed a framework for investors to attribute changes in equity portfolios’ emissions to their primary drivers. We now adapt it to identify and analyze two approaches to tracking a multi-asset-class portfolio’s carbon footprint. 

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Making the Most of Mandatory Climate Disclosures 

As TCFD reporting grows more sophisticated, investors may be able to use climate data to make meaningful disclosures across their firms. We explore three key topics: choice of metrics, internal consistency and cross-functional applications. 

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Climate and ESG Indexes in Focus: Let’s Get Specific 

How did our flagship climate and ESG indexes fare versus the broader market in the second quarter? And how much did constituent companies decarbonize since the quarter before? We delve into the specifics.

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ICVCM’s Core Carbon Principles Narrow the Gap Between Idealism and Pragmatism 

To date, the voluntary carbon market (VCM) has lacked a common benchmark for carbon credit quality. The Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles (CCPs) are a step toward building greater confidence in the market. 

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Do Agency CMOs’ Financed Emissions Have Duration? 

The market for collateralized mortgage obligations backed by agency residential mortgage-backed securities is a major source of financing for U.S. homeownership. But what is this market’s total emissions footprint? We use our model to calculate it. 

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Small Caps Have Been a Big Story After Recessions 

Some investors are already evaluating opportunities offered by a post-slowdown world. One of these opportunities is small-cap stocks, which have historically outperformed large caps, especially after recessions.  

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The Rise (and Rise) of Sub Lines in Private Capital 

Private capital funds have grown increasingly comfortable utilizing subscription lines of credit, though usage varies. We examine their deployment across venture capital, buyout, real estate and debt funds. 

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Breaking Down Financed Emissions for Agency RMBS 

Agency residential mortgage-backed securities (RMBS) finance about 17% of U.S. residential greenhouse-gas emissions annually. We break down that number to help issuers and investors understand emissions sources and drivers behind agency RMBS.  

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Uncovering Value in Venture-Capital Growth Markets 

Valuations proposed for venture-capital (VC) growth companies, frequently used as benchmarks for publicly listed growth stocks, often attract heated debate. Our analysis can offer fresh insight into the valuation of private VC companies. 

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The Price Is Right? Real Estate Merits More Measures 

Assertions that there is one “right” measure of pricing for property markets are wide of the mark. We examine an array of data points which shed light on the downturn in prices and liquidity, focusing on the U.K. office market.  

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Markets in Focus: Looking Beyond the Rate Hikes 

Investors face “sticky” inflation, equity-market concentration and expectations that U.S. interest rates may be higher for longer. We examine recent global-markets trends to help as asset allocators and portfolio managers determine their next move. 

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BECCS – Promising Technology for Net Zero or an Expensive Bet? 

The rapid growth in interest in bioenergy with carbon capture and storage (BECCS) has been evidenced by a flurry of recent commercial deals, but BECCS face challenges with scalability and cost effectiveness.

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VCMI Claims Code of Practice – Important Progress but the Difficult Stuff Still Lies Ahead 

The Voluntary Carbon Market Integrity Initiative’s Claims Code of Practice clarifies some aspects of how corporations can make high-integrity claims regarding their voluntary use of carbon credits, but more-controversial issues remain. 

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Measuring Sovereign Bonds’ Climate Risks and Opportunities 

Quantifying sovereign bonds’ physical and transition risks may help investors determine the climate resiliency of their portfolios. MSCI Climate Change and Natural Hazards Risk Factor Score may help guide the analysis of these complex risks. 

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Exploring Factor Investing in Emerging Markets 

Following up on a recent MSCI survey that revealed uncertainty among investors about the comparative risk-and-return benefits of EM and DM factor investing, we simulated the performance of six common EM factor indexes over the last two decades.  

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The Fed's Pilot — Are Banks Prepared for the Climate Transition? 

Regulators around the world are focusing on climate-related scenario analysis to assess banks’ climate-risk exposure and their preparedness for the low-carbon transition. We look at the Fed’s pilot to see how the six biggest U.S. banks stack up. 

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Foul Is Fair, Fair Is Fair: Is Private Equity Rich? 

Our analysis using the Burgiss Manager Universe, combined with novel analytics, suggests that venture-capital funds at the end of 2022 were close to fairly valued, and buyout-fund valuations appeared to be in line in with historical norms.  

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Mapping Extreme-Heat Costs for the World’s Largest Cities 

As temperatures rise, so do the risks from extreme heat. Using hazard percentiles compared across climate scenarios, we assess the cities and sectors that could be most impacted and the costs they could face. 

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Agency MBS Are Going Social 

Fannie Mae and Freddie Mac have begun disclosing socially focused borrower data for all pools of U.S.-agency mortgage-backed securities. How can that data inform MBS investors’ models for prepayment risk? 

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The Futures of Climate Action Is Now 

Derivatives linked to climate investing are in the early stages of product innovation and investor adoption. We compared the impact, financial risk and opportunity metrics for futures on the MSCI Climate Action Indexes.  

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The Struggles of Sweden's Property Market 

Higher lending rates have hobbled commercial-property investment in one of Europe’s larger markets. We use multiple data sets to assess the impact on listed companies and the trading of assets. 

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Looking for Loan Trouble 

The timing of loan maturities could be key to determining which areas of U.S. commercial real estate may face trouble refinancing. We look at the markets for Manhattan offices and Dallas apartments to paint the picture.  

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EU Taxonomy: Is There Sustainable Gas-Fired Power Generation? 

Just how much impact will the inclusion of gas in the EU Taxonomy have on the reported-level of EU Taxonomy-aligned revenue in portfolios? Gaps in company disclosures and the stringency of requirements suggests it could be minimal.

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Tracking a Corporate-Bond Portfolio’s Emissions Over Time 

Several factors can drive the changes in a corporate-bond portfolio’s emissions. Our framework helps disentangle these variables and provides investors with greater clarity into their climate-aware strategies. 

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Style Bets, Not Stock Picks, Drove Returns in 2022 

In 2022, unlike in the prior two years, stock selection took a backseat to style factors and industry bets as performance drivers. Top-performing funds gained from all three exposures, while bottom-performing funds lost on all counts.

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Capital for Climate Action Conference: Key Takeaways  

MSCI’s Capital for Climate Action Conference brought together leaders from a diverse group of global organizations to untangle the latest developments in the net-zero transition. Here are some of the biggest takeaways. 

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Connecting Emissions Attribution with Climate Action 

Tracking a portfolio’s carbon footprint can be challenging given the multiple drivers of changes in emissions. Our framework attributes these changes to their primary drivers, including changes in issuers’ emissions, ownership and financing structure.

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Has Energy Efficiency Emerged as a Driver of Real Estate Returns? 

Property investors are increasingly focused on climate change and net-zero commitments. Have investors who “green” their portfolios by acquiring more energy-efficient assets and disposing of higher-emitting ones gained a performance edge? 

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The World After COVID-19: Exploring the Market’s Digital Makeover 

COVID-19 hastened the digital transformation of global equities and increased exposures to other themes. We apply an attribution framework to the MSCI ACWI IMI and offer valuable insights into how these shifts have impacted investor portfolios.  

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Reports of the VCM’s Ill Health Are Greatly Exaggerated 

Despite negative news about voluntary corporate climate action, evidence suggests the health of the voluntary carbon market is relatively robust. There has been an uptick in corporations setting net-zero targets and the market for carbon credits is holding steady, despite the tough economic climate and media criticism. 

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The CDS Market’s View on US Default 

There is growing investor concern that the U.S. could default on its debt obligations. As the debt-ceiling debate heats up, we look at the spreads of credit-default swaps as a measure of the U.S. government’s creditworthiness.

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Climate and ESG Indexes in Focus: Sectors Told the Story 

We review the drivers of performance for ESG and climate indexes over the first quarter of 2023, and investigate the explanatory power of the carbon-efficiency factor over time. 

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Macro Scenarios: Soft, Hard or No Landing This Year? 

In the wake of the recent banking turmoil, a soft landing for the U.S. economy now seems less likely than at the beginning of the year. We considered four scenarios and performed a stress test on a hypothetical portfolio of global stocks and U.S. bonds.

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Why More Short-Dated Options Did Not Increase Market Volatility 

Trading of U.S.-listed options more than doubled in 2022 compared to 2019 — as investors gradually gravitated from monthly to weekly to even daily options over those four years. Some have wondered if this could lead to greater equity-market volatilty.

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How Extreme Temperatures May Affect Chinese Companies 

As temperatures rise in China, comprehensive adaptation and response plans are crucial to mitigate the physical risks of extreme heat. We assess which sectors could be most at risk under both orderly and extreme warming scenarios.

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How Sovereigns Have Changed the Green-Bond Market 

Green bonds’ issuance by governments has increased significantly and changed the green-bond universe and its indexes. Investors have had to adjust accordingly.   

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Climate-Transition Risk Part 3: Are Private-Asset Managers Ready? 

We use climate-transition risk estimates to compare exposure across asset classes and regions of the private-asset universe. 

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Long Story Cut Short in Regional Equity Futures Positioning 

The recent banking crisis startled the credit markets while the broad equity market remained resilient. We analyze net long-short positions as investors adjusted their index futures exposures to adapt to changing market dynamics.  

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Assessing Banks’ Risk-Oversight Capabilities 

With the banking crisis raising questions about boards’ risk oversight, we analyze the level of independent risk-management expertise on the boards of banks by region to see how well they may be positioned to navigate the current volatility.

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Markets in Focus: Factor Valuations and the New Rate Regime 

Global equities and bonds remained volatile in the first quarter of 2023 following a strong start and a bumpy finish due to global banking concerns. We analyze whether factor valuations have adjusted to the new interest rate environment.  

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Diversifying Away Cash Drag 

Constructing self-financing private-capital portfolios, where distributions exceed contributions, can simplify a limited partner’s liquidity-management strategy and reduce cash drag. How could diversification help investors in this effort? 

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Underwriting the Biodiversity Crisis 

Some property and casualty insurers already use geospatial analysis in their pricing, claims processing and risk management. Adding a layer of biodiversity data to this analysis may help incorporate biodiversity considerations in underwriting.

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CoCo Bonds’ Write-Down Risk Is Real 

UBS Group AG’s arranged takeover of Credit Suisse AG involved heavy losses for the latter bank’s shareholders. But a more controversial part of the deal is the total write-down of contingent convertible bonds. Could investors have seen it coming?

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The Silicon Valley Tantrum 

The past week’s change in the slope of the Treasury yield curve was its most rapid in decades. Investors may wish to contemplate the two most recent examples of such swift steepening: the 2008 global financial crisis and 2020 COVID-19 market crisis.

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What Could Yield Curves Tell Us About Bond Values? 

A corporate bond’s yield curve is similar to the well-known Treasury yield curve. Could the deviation of a corporate bond’s yield from the yield curve, or mispricing spread, be a useful signal for credit investors?

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China’s Voluntary Carbon Market Could Burst Back to Life 

A planned relaunch of China’s emissions-reduction credit system could revive the country’s carbon market. We detail what’s known and what’s still to be decided about the system, and the likely implications for the market.  

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A New Era for the Bank of Japan? 

Haruhiko Kuroda is stepping down after a decade as governor of the Bank of Japan, and the soon-to-be-appointed Kazuo Ueda has the potential to shake things up. What could the new regime mean for investors?

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How Could China’s Reopening Impact Global Stocks? 

China’s reopening from COVID-19 lockdowns has led to the recent outperformance of the Chinese equity market. We used companies’ economic-exposure data to assess the reopening’s impact on global equities with large revenue exposure to the country.

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MBS Valuation and Risk Management Under SOFR 

With LIBOR’s imminent cessation, the transition from LIBOR to new benchmark the secured overnight financing rate (SOFR) is entering a new stage. We analyze the potential impact on valuation frameworks and hedging practices for mortgage-backed securities.

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Real Estate Factors’ Performance: The Financial Crisis vs. Now 

As U.K. real estate experiences a pricing correction at record pace, it’s natural to make comparisons to the 2008 global financial crisis. We draw on factors in private real estate to better understand current conditions and give us clues to what may happen next.

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Manhattan Office Redevelopment: Still Stuck on Pricing 

Sales of Manhattan offices for the purpose of conversion into apartments have been minimal. We look at the barriers deterring redevelopment.

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Carbon-Emissions Data to Inform the MBS Market 

Our state-level analysis of carbon emissions for U.S. residential properties indicates strong regional differences in emissions and their drivers. Such data could improve understanding of emissions from holdings in mortgage-backed securities and property loans.

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ESG Factor Returns: 2022 in Review 

Our analysis of ESG factor performance in 2022 suggests that time horizons, as well as specific sectors and regions, may be significant in assessing the return characteristics of ESG portfolios. 

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Will the US Government Default? 

The debt-ceiling debate has heated up in Congress, and the U.S. government’s ability to borrow could be exhausted sometime between July and September. But what does the market for credit-default swaps say about the likelihood of U.S. default?

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40% Women on Boards — the New Frontier 

The number of women on boards continues to rise. While a 30% board gender diversity target has long been the magic number, the continued evolution of boards, both by choice and by regulation, means 40% women on boards is becoming the new frontier.

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Drawing Insights from Thematic Exposures: The (Natural) Language of Growth Investing 

What impact could natural language processing (NLP) have on equity portfolio management? We explore how firms’ thematic exposures, assembled with an assist from NLP, can bring unique insights to portfolios.

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Regional Blocs: Emerging to Diverging Markets 

One of the primary investment implications of deglobalization in 2022 was a greater dispersion of returns among countries. We review the investor challenge of identifying potential pockets of opportunity through targeted EM allocations.

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Global Markets One Year After Russia’s Invasion of Ukraine 

Markets have partially recovered since Russia invaded Ukraine, but questions remain about inflation, economic growth and central banks’ actions. Understanding last year’s performance across asset classes, may help with investment decisions in 2023.

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What Biodiversity Loss and COP15 Mean for Investors 

Investors face growing pressure to reverse biodiversity loss. We take a look at the issues shaping nature-related financial risk, key takeaways from the COP15 pact for investors and developments in biodiversity-based disclosure.

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Agency MBS in 2023: Uncharted Territory 

Rates spiked in 2022 as the Federal Reserve started quantitative tightening, pushing the prices of most agency mortgage-backed securities into discount territory, while prepayment speeds have slowed to a historical low. The market has entered uncharted territory.

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A Day in the Life of Regional Futures 

Investors benchmarked to global and regional indexes may use index futures for hedging or asset-allocation decisions. We analyzed the intra-day volume patterns of futures linked to the MSCI World, MSCI EM and MSCI EAFE Indexes to illuminate pockets of liquidity.

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Is Inflation Here to Stay? 

The market has recently signaled optimism about slowing inflation and interest-rate hikes. If correct, such easing could lead to lower mortgage rates. But could real estate costs themselves continue to push up inflation?

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Matching Portfolios and Clients’ Expected Returns, with Factors 

Wealth managers face the challenge of matching clients’ objectives with an ever-growing set of investment products. Standard practice is to build strategic asset-allocation models based on broad capital-market assumptions. But we present a new approach.

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How to Evaluate Climate Metrics and Avoid the Big Confusion 

Climate metrics can often be a daunting field, with misunderstanding and confusion rife. We present a two-step toolkit that can help investors identify the most suitable metrics as they look to gauge progress toward their climate-investing goals.

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Four Scenarios for 2023: Navigating Uncertainty 

The macroeconomic landscape for 2023 is shrouded in uncertainty following a tumultuous 2022. We consider four scenarios for growth, rates and inflation and gauge their potential impact on a portfolio of global equities and U.S. bonds.

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The Performance of ESG Indexes: Year in Review 

There were several dynamics that influenced the performance of ESG indexes in 2022. We examine the impact of macroeconomic and financial conditions on returns in the short- and long-term.

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What Would the SEC’s Liquidity Proposal Mean for Equity Funds? 

The SEC recently proposed amendments to the liquidity classification of open-end investment funds, aimed at standardizing reporting practices. But under the proposed approach, many large equity funds could exceed regulatory limits.

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Climate Indexes' Year in Review: The Journey Toward a Low-Carbon Transition 

There have been several dynamics that influenced climate-index performance in 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors, as well as the management of low-carbon transition risks.

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Comparing Apples to Apples in Bond-Fund Liquidity 

The SEC has proposed changes to standards for classifying the liquidity of fixed-income instruments held by open-end funds. The new approach may not pick up differences between funds and may not signal worsening liquidity amid market stress, however.

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Building the Corporate Boards of the Future 

Corporate boards are key in helping companies navigate economic and social disruption. Introducing more climate-related experience, more women and appointing younger directors are three key factors that could help strengthen boards.

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India Equity Futures for the World 

India is the world’s fifth largest economy and one of the fastest-growing major markets. We believe that futures linked to the MSCI India Index could help capture a deeper opportunity set and manage Indian equity exposure. 

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No Country for Old Firms? Revisiting Growth and Thematic Investing 

Investors that were previously enthralled with growth at any price have since retreated. With this in mind, we focus on spotting key differences between growth and thematic investing, and highlight how the two can complement each another.

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Parallel Benchmarking for Climate Alignment 

Broad market-cap weighted indexes might not fully assess climate-objective alignment. We believe that an appropriate parallel benchmark could help illustrate this alignment, improve transparency and allow investors to make more informed decisions.

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Markets in Focus: Investors Look to Capture Big Market Shifts 

Global equities and bonds declined in 2022 against a surge in inflation, waning economic growth and monetary tightening. We highlight how factor indexes, country allocation and thematic investing can help investors capture opportunities with greater precision.

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Growth Investing in Private Markets: Trends and Transparency 

Are quoted returns of private-equity investment comparable to those in public equity markets? To analyze this quandary, we use transaction and order-book data for timely insights into venture capital trends and relate them to public markets. 

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Challenges for Non-Traded Private REITs Are Not Unique 

Increased talk of redemption queues has led to some seeing a dimmer future for groups with net-asset-value REITs — but their challenges are not unique. The impact of credit-market stress has hit all private vehicles for commercial real estate. 

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Three Scenarios for Fed Policy, Inflation and Growth 

Despite two months in a row of unexpectedly low inflation, the Fed once again raised rates this week. Amid considerable uncertainty over inflation and rate policy, we analyze three scenarios for the U.S. economy and their impact on diversified portfolios.

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Deforestation Risks on the Rise 

Continued forest loss poses risks to companies and investors. We use MSCI’s Biodiversity Screening Metrics to help identify industries exposed to deforestation risks and flag companies for a review of risk-management practices and active engagement.

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Six ESG and Climate Trends to Watch for 2023 

Amid a seismic shift in the ESG and climate landscape, we identify key trends companies and investors need to be cognizant of. Beyond the road to net-zero, issues such as supply chains, labor management and biodiversity could impact portfolios. 

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From Paris to the Pandemic: Investigating Trends in Industry Emissions 

Emissions-intensity metrics can help compare the relative contributions of different holdings to a portfolio’s carbon footprint. However, understanding the reasons behind a firm’s changing emissions is key to identifying sustained reduction trends.

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Lost and (Not) Found: Carbon Migration Out of US Public Markets 

While public markets are witnessing growing climate-related regulatory proposals and voluntary commitments, climate disclosures in private markets remain limited. We examine whether carbon emissions are migrating out of U.S. public markets.While public markets are witnessing growing climate-related regulatory proposals and voluntary commitments, climate disclosures in private markets remain limited. We examine whether carbon emissions are migrating out of U.S. public markets.

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Has Liquidity Dried Up in Private Equity? 

Investors who commit capital to private-asset funds must provide money when the fund managers buy portfolio companies, but receive it back only when the managers sell. The uncertain timing and size of these cash flows demand careful liquidity management.

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Insurance Joins List of Options to De-risk Carbon Credits 

New insurance products aim to reduce the risk of investments in, or purchases of, carbon credits. We examine the risks that the new offerings try to mitigate and identify what’s not covered. 

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How Accurate Are ‘Zombie’ Valuations? 

Are general partners overstating zombie valuations, and thereby postponing eventual write-downs, or should LPs ultimately expect this capital to be distributed in full? We present evidence that zombie assets have been, on average, appropriately valued. 

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Three Scenarios for Investors in European Credit 

We explore three scenarios of varying severity for European credit, with outcomes for a multi-asset European portfolio ranging from a 2% return in a “mild recession” scenario to an almost 11% drop in a “sharp global recession,” according to our model. 

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Total Portfolio Footprinting to Transform Green-Bond Emission Accounting 

We take a look at how MSCI’s Total Portfolio Footprinting could provide an innovative way for investors to compare the financed-emissions of green and non-green bonds, helping them make better informed investment decisions.

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The Rise and Fall of Big Tech 

U.S. tech giants had a spectacular run over the past decade, but the tide has turned for many of these companies in 2022. We evaluate Big Tech’s descent and discuss the efficacy of building resilient portfolios.

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What COP27 Means for Companies and Investors 

COP27 underscored the need for action on corporate climate pledges, the importance of data and a series of initiatives to spur public and private investment for developing countries. We review some of the key developments for companies and investors.

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Can Style Momentum Be Optimized? 

Momentum is a well-documented investment strategy used across assets, industries and asset classes, as well as style factors. We present an optimized style-timing strategy that accounts for both past performance and the variance-covariance of styles.

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Climate-Transition Risk and Private Capital: An Upstream Approach 

We examine the climate-transition risks from fossil-fuel combustion for set of private U.S. companies, employing the upstream approach. 

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Climate-Transition Risk and Private Capital: An Introduction 

Using climate-transition risk models — both upstream and downstream —investors can work to put a climate price tag on private assets and compare exposures across asset classes and regions. 

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Footprinting the World’s Largest Asset Managers 

We assessed the carbon footprint of the world’s largest asset managers and found that while there was little difference between equity and fixed income assets, geography and size mattered when it came to carbon intensity.

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Leveraging Governance to Improve Net-Zero Engagement 

Reducing emissions of greenhouse gas may mean that investors engage with companies lacking adequate net-zero targets. This post explores different engagement tools that investors can use to help net-zero laggards catch up to net-zero leaders. 

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What Drove Private-Credit Funds’ Outperformance? 

When selecting private-credit funds, investors can often only consider broad strategies, due to the general opacity of the asset class. We draw on loan-level data and proprietary analytics to produce a more detailed picture of the direct-lending market. 

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Diversification for Home-Biased China Investors 

The U.S. and China represent two of the largest and complementary global-equity markets. We detail whether home-biased investors in China may be neglecting long-term growth and diversification opportunities.

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US Midterm Elections from an Equities Perspective 

Leading up to and including Nov. 8, Americans will vote for 35 Senate and all 435 of the voting House seats.

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A Correction in US Commercial Real Estate 

Potential buyers and current owners of U.S. office assets have moved apart on price expectations, causing deal activity to drop. We discuss two approaches to gauging the outlook for pricing.

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Supporting the Low-Carbon Transition: An Indexed Approach 

Investors globally are committing to reduce the carbon footprint of their portfolios. We illustrate how indexes can be an option for investors who wish to finance the transition as well as encourage companies to set and meet net-zero targets. 

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Climate Action Could Lessen Physical Climate Risks 

A future that relies on fossil fuels could expose almost a quarter of the market value of companies in the MSCI ACWI IMI to the risks of severe physical climate impacts. Which were the most vulnerable sectors and what can be done to limit the risks? 

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炭素効率型企業が追い風となるも、各種ESG指数はアンダーパフォーム 

While much of the market volatility endured, the MSCI ESG Indexes’ performance drivers varied from the first half to the third quarter of 2022. We examine the impact of macroeconomic and financial conditions on returns in the short- and long-term.

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ESG Indexes Lifted by Carbon-Efficient Firms but Underperformed 

While much of the market volatility endured, the MSCI ESG Indexes’ performance drivers varied from the first half to the third quarter of 2022. We examine the impact of macroeconomic and financial conditions on returns in the short- and long-term.

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Keeping Energy Exposure While Lowering Emissions 

Could equity managers have maintained their energy exposure during the sector’s recent outperformance while also reducing carbon emissions? We find that they could have lowered emissions but with some trade-offs during our study period. 

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Trove’s Updated Carbon Industry Classification 

Trove Research introduces a new project classification to provide a comprehensive and more-granular picture of the entire voluntary carbon market and reviews the current market structure across all registered projects. 

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Decarbonizing Bond Portfolios: Risk Trade-Offs 

Bond investors looking to reduce their portfolios’ carbon footprint may decide to shift capital from high to low emitters. Did a decarbonizing approach that preserves sector exposures significantly change the main portfolio risk characteristics? 

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REDD.plus — A Green Idea, but Too Many Red Flags 

The REDD.plus initiative has raised concerns due to its potential to flood the voluntary carbon market with carbon credits. The lack of methodological rigor, independent verification and permanence safeguards represent additional red flags.

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Does EasyJet’s Pivot Away From Carbon Credits Mean Airlines Are Cooling on the Carbon Market? 

EasyJet Plc’s decision to stop buying carbon credits has raised concerns about airlines’ participation in the voluntary carbon market. We examine whether the worry is warranted.  

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Despite Energy Outperformance, Climate Indexes Were Resilient 

There have been several dynamics that have influenced climate-index performance in the third quarter and first nine months of 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors. 

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エネルギーセクターがアウトパフォームしたものの、気候指数もレジリエンスを発揮 

There have been several dynamics that have influenced climate-index performance in the third quarter and first nine months of 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors. 

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Getting the Full Picture on Tenant-Default Risk in Real Estate 

With economic pressures mounting, we examine the importance of analyzing rental income across all tenants in real estate funds, and not just the biggest tenants. 

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Markets in Focus: Is the Beta Pendulum an Edge or Hedge? 

Investors remained fearful of inflation and recession worries in the third quarter of 2022. We take a closer look at beta in a period where factors were sensitive to changing market conditions.

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Rent-Growth Expectations Shaped Returns for US Industrial Real Estate 

Investment in industrial real estate has benefited in recent years from the growth of online shopping, a trend that was turbocharged during the pandemic. But are expectations for the sector still grounded in reality?   

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Net-Zero Alignment for Multi-Asset-Class Portfolios 

Asset owners who want to keep global warming below 1.5 degrees Celsius (1.5°C) have a tough row to hoe.

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Climate Stress Tests: Upping the Ante for Banks and Insurers 

When institutional investors and financial supervisors seek to understand climate risk exposures of banks and insurers, they look to climate scenario analysis. 

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The Truth Will Out: Is Private Equity Overvalued? 

Are valuations of venture-capital and buyout funds on point? Our analysis exploits the fact that fund valuations are subjective, but fund cash flows are objective, that is, distributions reveal the true value of assets, and the truth will out. 

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Looking Beyond Japan to Understand Risks to the Yen 

By remaining steadfast in its commitment to zero yields, the Bank of Japan may have sacrificed the ability to control its own destiny. 

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日本国外に目をむけて円へのリスクを理解する 

ゼロ金利政策にこだわるあまり、日本銀行は自らの運命の手綱を手放してしまったかもしれません。これは、黒田東彦日本銀行総裁の声明にも見られました: 「金利の調整により円安を止めるには、経済にダメージを伴う大幅な金利上昇が必要になる1」。このため、日本と円にエクスポージャーを持つ投資家がポートフォリオへのリスク要因を理解するためには、日本国外に目を向ける必要があるかもしれません。

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Crowd Control for Fund Managers 

Stock markets around the world have heated up this summer. The MSCI ACWI Investable Market Index (IMI) has gained 5% in the third quarter, a partial thaw from its chill when it fell 20% through the first half of the year. 

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Portfolio Intelligence Through a Carbon-Efficiency Factor 

The transition to a low-carbon economy may trigger a major transformation of the global economy, generating significant risks and opportunities for companies and investors.

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Inflation Reduction Act May Energize Utilities’ Energy Transition 

The Inflation Reduction Act may help utilities and energy firms reduce direct and indirect emissions through tax-credit incentives designed to scale up the deployment of renewables and accelerate development of frontier decarbonization technologies.  

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How Did Climate Corporate-Bond Indexes Weather Market Volatility? 

Climate indexes tend to have a lower weighting (relative to parent indexes) allocated to companies in the emission-intensive energy, utilities and materials sectors. Did these indexes underperform in the year to date, given high recent energy prices?

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Navigating Inflation in Equity Portfolios 

Stock-level inflation sensitivity can help investors assess a portfolio’s exposure to inflation. We use this metric to construct hypothetical portfolios aligned with investors’ range of views on inflation.  

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MSCI ESG Indexes Underperformed but Met ESG Objectives 

There have been specific dynamics that have influenced ESG-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on return in the short- and long-term. 

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各種ESG指数はアンダーパフォームしつつも、ESG目標を達成 

There have been specific dynamics that have influenced ESG-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on return in the short- and long-term. 

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Inflation Sensitivity and Equity Returns 

Inflation and the chatter around inflation have been rising since last year (as shown in the exhibit below) following years of relatively tame inflation. This macroeconomic shift is likely to have both a short- and long-term impact on asset prices and has raised many important questions for investors.

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Private Assets Can’t Hide from SEC’s Proposed Climate Rule 

The SEC’s climate-disclosure proposal also may affect U.S.-listed GPs’ portfolios. In reality, the rule may represent the camel’s nose under the tent as the SEC indirectly brings climate transparency to some private companies.

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Did Closed-End Real Estate Funds Add Value? 

Global real estate markets enjoyed their strongest returns since the 2008 global financial crisis (GFC) as they bounced back from COVID-19-induced weakness last year.

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Value and Growth Investing as ESG and Climate Friendly 

Many investors may be seeking to align their value- or growth-oriented portfolios with the consideration of ESG as well as the transition to a low-carbon economy. We detail several approaches for working toward these investment objectives.

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Climate Indexes Brought Short-Term Gloom with Blooming Offshoots 

There have been several dynamics that have influenced climate-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on risk, return, sectors and factors.

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気候指数は短期的に冴えなかったが、明るい兆しも 

There have been several dynamics that have influenced climate-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on risk, return, sectors and factors.

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Measuring Climate Impact with Total-Portfolio Carbon Footprinting 

Carbon footprinting across multi-asset-class portfolios allows investors to measure financed emissions and inform decarbonization decisions. We examine this important step toward managing the net-zero journey.

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Abenomics’ Impact on Japanese Firms and Global Investors 

As the world mourns former Japanese Prime Minister Shinzo Abe, we ask: What was his impact on Japanese firms and global investors? To help answer, we look at two key initiatives: competitiveness and profitability, and corporate governance.

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Equities Ownership: Concentration on the Rise? 

Controlled companies accounted for nearly 46% of all constituents of the MSCI ACWI Index, as of Feb. 1, 2022, a 44% increase from 2015 levels. What does growing concentration mean for minority shareholders?

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Index Replication with Futures in a Deglobalized World 

While investors may aim to synthetically replicate equity indexes using a basket of local-index futures and currency forwards, our research focuses on potential country and currency risk as well as tracking error of these efforts. 

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Markets in Focus: Half-Time – Keeping it Real and Defensive 

It was a challenging market environment in the second quarter. We take a closer look at real assets, defensive sectors and factor indexes as investors navigate what might be a prolonged period of volatility and uncertainty.

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Chinese High-Yield Corporate Bonds Under Pressure 

Bonds from Chinese property developers have come under severe distress, and the latest wave of COVID-19 lockdowns have had a heavy impact on China’s economy. How has the country’s corporate-bond market responded?

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Carbon Markets: An Emerging Derivatives Class 

Carbon markets can play a significant role in managing carbon risk within equity portfolios to hedge against price risks. Our research focuses on applications, carbon-risk management and correlations to other assets classes.

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The Impact of ESG and Climate on Equity Yield 

Investors are increasingly incorporating ESG and climate considerations in asset selection. With that in mind, our research focuses on ESG and climate profiles in relation to equity yield and tracking error.

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How Eurozone Inflation and ECB Policy Could Impact Markets 

In a portfolio stress test, we consider the uncertainty around eurozone inflation and the European Central Bank’s policymaking. We outline four scenarios and their potential impact on the bloc’s economy and a hypothetical multi-asset-class portfolio.

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Are Emissions Rising or Falling in Equity Indexes? 

Investors can use different metrics to track their portfolios’ carbon footprint. Regardless, they will increasingly need tools to better identify the sources of changes in whichever climate metrics they use. We present an attribution methodology.

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Introducing the Carbon Market Age 

The carbon market can play a significant role in the decarbonization of the global economy by putting a price on carbon and giving polluters an incentive to reduce their emissions.

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Voluntary Carbon Market Integrity Initiative: Provisional Claims Code of Practice 

The Voluntary Carbon Market Integrity Initiative has introduced its Provisional Claims Code of Practice, guiding companies on using carbon credits credibly. We report the details of this milestone on the path to a high-integrity carbon market. 

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Plastic Packaging: The Unmasking of Regulations 

A rapid increase in plastic-waste regulations may increase costs and liabilities, or limit market access for companies that are slow to align with them.  

BLOG

The Signal for Industrial Property Amid E-Commerce Noise 

Demand and pricing for industrial commercial property got a boost from spiking e-commerce demand during the early part of the pandemic. We look at the longer-term trends in e-commerce sales for guidance.

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Real Estate Has Bucked the Deglobalization Trend 

Real estate investors have historically exhibited a strong home bias. But there is evidence that real estate may have become more global based on return and transaction behavior — bucking the trend, evident in listed markets, toward deglobalization.

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Are Russian Stocks Worthless? 

Fixed Income

Investors in Russian securities have faced sizable hurdles trying to manage and value their positions. Our research of the CDS market suggests that Russian stocks are essentially worthless, in contrast to the prices listed on the Moscow Exchange.

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SEC Climate Disclosure: Targeting Standardization 

The SEC has proposed new requirements for U.S.-listed companies to disclose information on climate-related risks. We believe the framework may represent an opportunity to facilitate the transparency and standardization of climate-related goals.

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A Factor-Based Approach to Munis in Turbulent Times 

Tracking municipal-bond benchmarks can mean evaluating hundreds of thousands of securities along many dimensions, such as credit ratings. We evaluate an alternative, factor-model-based approach. 

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Location Matters: Using Geospatial Analysis to Assess Biodiversity Risks 

A quarter of animal and plant species could face extinction heightening economic risks from biodiversity loss. Investors and issuers focusing on asset location and dedicated risk management practices could mitigate some of these challenges.

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China at a Crossroads: Three Scenarios for Investors 

The recent COVID-19 lockdowns in China and their impact on global supply chains add another concern for investors, on top of the Russia-Ukraine war. We model three scenarios for China and their potential spillover effects on global portfolios.

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Wildfire Risks and Costs for Companies 

Wildfires can potentially increase costs from physical risks for companies, making it an important consideration for investors as they manage risk in their portfolios. Our analysis revealed four future hotspots with elevated annual fire probabilitie

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Russian Bonds: Rolling Back the Default Clock 

Fixed Income

The Russian government’s decision on April 29 to pay holders of two dollar-denominated Russian sovereign bonds led to a major rally, encouraging some investors that Russia may avoid default. There are, however, more challenges ahead. 

BLOG

Low Carbon and High Liquidity for Bond Investors? 

ESG Research , Fixed Income

As corporate-bond investors embrace decarbonization as a goal in portfolio construction and management and benchmark selection, the question arises whether decarbonization targets are at odds with other desirable index attributes, such as liquidity.

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Russian Bonds: Sifting Through Sectors 

Russian bond market losses have cut deep. Still, certain sectors fared better than others. The question now is how trade policy and sanctions may be shifting, and whether there may be greater impact on sectors that have shown relative strength.

BLOG

Which Scope 3 Emissions Will the SEC Deem ‘Material’? 

The SEC’s climate-disclosure proposals did not set a “materiality threshold” for Scope 3 emissions, and the commission is considering either quantitative analysis for a uniform approach or letting companies determine materiality. How might each affect transparency?

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Real Estate's Income Risk in an Inflationary World 

Although real estate income returns have tended to be stable in aggregate, the right-hand chart below illustrates the extent to which they have varied across individual properties in the MSCI Pan-European Quarterly Property Fund Index (PEPFI).

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Sanctions Bring a New Form of Russian-Bond CDS Risk 

Sanctions on Russia have not affected credit-default swaps directly, but the settlement process following a default would rely on delivering and auctioning the sanctioned bonds. We examine this new form of recovery risk.

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As TCFD Comes of Age, Regulators Take a Varied Approach 

The recommendations of the Task Force on Climate-related Financial Disclosures have become a landmark reference for investors, who now face the challenge of making sense of how various jurisdictions will implement their versions of the TCFD’s standards.

BLOG

Drivers of China Equities’ Sell-Off 

Emerging Markets , Global Investing , Equity Themes , Equity indexes

Following the recent sell-off in Chinese equities, global investors may have some concerns and questions about their China exposure. Have fundamentals changed? What role did the Russia-Ukraine war play? Which factors are important to keep an eye on?

BLOG

Understanding Private Capital’s Exposure to Carbon-Intensive Sectors 

Real Estate Investing

Understanding private capital’s exposure to the energy, materials and utilities sectors, and their related industries, across asset classes, may be critical in supporting more-informed risk management and engagement decisions.

BLOG

Fed Policy and the Threat of Stagflation 

Integrated Risk Management

Investors are increasingly focused on inflation and the Fed’s tightening of monetary policy. With the Russia-Ukraine war and resulting sanctions, they may also worry about slowing economic growth. We model three economic scenarios’ potential impact on markets.

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Factors in Focus: Disentangling Market Gyrations Through the War 

Factor Investing

It was a tale of two quarters in many ways. We analyze the effects of past and present military conflicts on factor investing to provide insights to investors seeking to build resilient portfolios.

BLOG

Could Europe’s Shift from Russian Gas Accelerate Climate-Transition Risk? 

Europe’s search for energy sources outside of Russia may slow the low-carbon transition in the short term. Staying within a net-zero cumulative emissions budget would mean fewer emissions later. What might this path mean for investors’ portfolios?

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Companies May Not Be Ready for SEC Climate-Disclosure Rules 

The SEC proposed requirements for U.S. companies to disclose certain climate-related risks, beginning in 2024. To assess whether companies are prepared to meet these requirements, we looked at the emission-disclosure rates of a large sample of U.S. equities.

BLOG

What Drove 2021 Real Estate Returns? 

Real Estate Investing

As 2021 real estate index returns roll in, we’ve seen a broad-based acceleration of returns across nearly all countries and property types. But what can looking beyond the aggregate index returns tell us about the difference between the winners and losers?

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Bond-Index Replication While Navigating Volatility 

Market volatility poses major challenges to investors trying to track bond indexes while also keeping transaction costs low. Can managers of funds tracking bond indexes balance transaction costs and tracking error?

BLOG

Evaluating Options in Different Macro and Volatility Regimes 

Faced with volatile markets, some have looked to options strategies to manage volatility or target alternative risk/return profiles. We evaluate historical performance of options-overlay strategies across various macro and volatilty regimes.

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March Madness — Voluntary Carbon Market Volatility 

Voluntary-carbon-credit prices have experienced a significant correction since Russia invaded Ukraine, with the most liquidly traded exchange-based contracts falling by 20-30%, although Trove Research’s weighted OTC/Exchange indexes have shown more resilience. 

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Quality in Times of Crisis 

Two years into the “pandemic rally,” global equities finally cooled as rising inflation, looming interest-rate hikes and the war in Ukraine spooked equity investors. High-quality firms, however, have been relatively resilient. We examine why.

BLOG

Reported Emission Footprints: The Challenge is Real 

ESG Research

Investors’ ability to make comprehensive assessments of companies’ climate profiles relies on being able to analyze trustworthy corporate disclosures of greenhouse-gas emissions. Yet the current state of disclosures remains challenging.

BLOG

Which Factors Rose with the Price of Oil? 

Factor Investing

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Riding Rising Interest Rates with the Agency-MBS Model 

Fixed Income

Expectations of higher inflation dominated the market for U.S. agency mortgage-backed securities in 2021. We reviewed the performance of our agency-MBS model in 2021, to assess its accuracy and help investors manage MBS risk through what may be a volatile 2022.

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Markets May Be Vulnerable to Stagflation from Russian Invasion 

In addition to the growing human toll, Russia’s invasion of Ukraine could significantly impact economies and financial markets worldwide. We employ stress testing to explore two scenarios and their consequences for multi-asset-class portfolios.

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Has DEI Worked for Women? 

ESG Research

Have Diversity, Equity and Inclusion programs worked for women? While these can help establish frameworks and goals, it’s less clear whether they actually have improved diversity.

BLOG

Five Misconceptions About Climate-Change Risk in Real Estate 

Real Estate Investing

Real estate portfolios may be particularly vulnerable to the threat of climate-change risks. While investors are increasing their focus on the topic and considerable progress has been made in recent years, some misconceptions remain.

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China’s Green-Bond Market: Growing Issuance and Historical Outperformance 

ESG Research , Fixed Income

China’s green-bond market has grown rapidly in recent years and is now second in size only to the U.S. Understanding the reasons behind this market’s growth and performance may help investors as they consider incorporating Chinese green bonds in portfolios.

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中国绿色债券市场：发行量不断增长， 历史表现优异 

ESG Research , Fixed Income

中国已成为仅次于美国的全球第二大绿色债券发行国家。

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Paris-Aligned Indexes to Manage the Future 

ESG Research

As commitments to reach net-zero by 2050 surge, institutional investors are looking for tools to implement net-zero strategies in portfolios. Futures linked to the MSCI Climate Paris Aligned Indexes are one option for asset managers and asset owners.

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Latin American Equity Markets: The Lay of the Land 

Equity indexes

How is Latin America different from other emerging markets? We analyze the influence of foreign direct investment; market performance; exposure to sectors and thematic investments; ESG and climate risks and opportunities and corporate-ownership structures. 

BLOG

Say on Climate: Investor Distraction or Climate Action? 

ESG Research

Say-on-climate shareholder votes are on the rise globally. Are they a distraction to real climate efforts or an effective way for shareholders to engage management?

BLOG

US ABS: Strong Bounce Back, Uneven Performance 

Fixed Income

As the U.S. job market has begun to recover, so have consumer credit levels. The issuance of U.S. consumer asset-backed securities (ABS) had a strong bounce back in 2021. What drove this surge across ABS markets?

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Nasdaq’s New Board Diversity Rules: What’s the Impact? 

ESG Research

The Nasdaq stock exchange’s new diversity rules will impose board-diversity disclosure requirements on Nasdaq-listed companies. These new rules may nudge companies to improve the diversity of the boards or risk facing investor pressure.

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Managing Climate-Transition Risk in Credit Portfolios 

ESG Research , Fixed Income

Can managers take an active approach to systematically managing exposure of a corporate-bond portfolio to climate-transition risk? We investigate two different approaches to decarbonizing credit portfolios.

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Despite Oil & Gas’s Rebound, ESG Indexes Outperformed 

ESG Research

In 2021, oil and gas stocks bounced back after five years of weak performance. However, leading MSCI ESG Indexes, which often have lower weights to high-carbon emission industries such as oil and gas, were resilient last year. What drove performance?

BLOG

石油・ガスがリバウンドするも、ESG指数はアウトパフォーム 

ESG Research

In 2021, oil and gas stocks bounced back after five years of weak performance. However, leading MSCI ESG Indexes, which often have lower weights to high-carbon emission industries such as oil and gas, were resilient last year. What drove performance?

BLOG

Personalizing Climate-Focused Wealth Management Portfolios 

ESG Research

A climate-first approach can help wealth managers tailor portfolios to the unique preferences of clients who want their investments to slow climate change or create positive impact while furthering their financial objectives and appetite for risk.

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Why Your Portfolio May Be Hot, Cold or Just Right 

ESG Research

Investors may want to understand not only if their portfolios are aligned with global climate goals but why they may (or may not) fall short of the mark. A performance-attribution analysis can help them understand how “hot” or “cold” their portfolios are.

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Climate Change and the Cow in the Room 

ESG Research

The global food system is one of the major drivers of climate change, biodiversity loss and depletion of freshwater resources. We looked at traditional plant-based and alternative proteins trends and potential transition risks to food companies’ valuations.

BLOG

How ‘Greenflation’ Could Impact Bond Returns 

Fixed Income

Investors and policymakers are increasingly focused on the fact that a transition to a low-carbon economy could result in “greenflation,” which could put upward pressure on long-term interest rates and in turn lead to downward repricing of bond portfolios.

BLOG

2022 Private-Asset Trends to Watch 

Real Estate Investing

Private-asset investors are waking up to the urgency of the climate crisis, while dealing with other long-term disruptive trends that accelerated during the pandemic. We may see a substantial reallocation of capital as investors respond to these challenges.

BLOG

Hotter Inflation Set Some Styles and Sectors on Fire 

Factor Investing

Whether due to stimulus, deglobalization, decarbonization or an overheating economy, higher inflation could have an impact on style-factor and sector performance. We investigate this impact in the context of two potential economic-growth regimes.

BLOG

Higher Agency Loan-Size Limit: A Booster Shot in ARMs? 

Fixed Income

Securitizations for U.S. agency adjustable-rate mortgages have declined since the 2008 global financial crisis. But could a loan-limit increase by the government-sponsored enterprises, boost issuance of agency-ARM mortgage-backed securities?

BLOG

ESG Trends to Watch for 2022 

ESG Research

As the world’s biggest companies work toward net-zero, corporations ask: What do we do about our suppliers? Meanwhile, ESG investing truly has gone mainstream (with the regulatory attention to prove it). We review these trends and emerging risks.

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Factors in Focus: Are Your Equity Styles Ahead of the Curve? 

Factor Investing

If economic expansion and higher inflation continue in 2022, interest rates could rise around the world. As investors re-evaluate equity portfolios, we look at factor-index performance in different U.S. interest-rate and yield-curve regimes.

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Did Market Liquidity Impact Real Estate Returns? 

Real Estate Investing

Real estate is an illiquid asset class. But liquidity can also vary considerably between different assets, markets and time periods. Have differences in liquidity within real estate had an impact on investment returns?

BLOG

Will Rising Sea Levels Eventually Sink Christmas? 

ESG Research

It’s not just Santa’s North Pole headquarters that are at risk from global warming. Around 75% of the world’s toys are made in China — most coming from the country’s coastal provinces which face an increasing threat of flooding as global temperatures rise.

BLOG

Which Companies Lost Most in Europe’s Lost Decade? 

Global Investing

If uncertainties over deglobalization persists, the performance divide between Europe and the U.S. could widen further. Have European firms been more at risk, given they have had more international revenue than U.S. companies?

BLOG

Did Deglobalization Add to Inflation Woes? 

Global Investing

Inflation watchers, aware of how COVID-19 led to trillions of dollars of stimulus, may want to note the longer-term shift toward deglobalization. As these forces collide, they may lead to rising global inflation and affect asset-allocation strategies.

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The Implied Temperature Rise of 'Paris-Aligned' Indexes 

ESG Research

Using Implied Temperature Rise — an intuitive metric that can be used to assess net-zero alignment — we analyze temperatures for climate-focused indexes designed to meet or exceed the requirements of the EU Paris-Aligned Benchmarks standard.

BLOG

What Implied Temperature Rise Means for Funds 

ESG Research

With COP26 over, the hard work begins as investors seek to limit temperature rise to less than 2°C above preindustrial levels in their portfolios. We investigate how they can understand whether a portfolio or fund is aligned with temperature targets.

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Spotlight on the Markets: Are Supply Chains the New Grinch 

Global Investing

The holiday season may only exacerbate supply-chain challenges affecting the availability and prices of goods. In this inaugural edition of Spotlight on the Markets, we analyze performance and how investors are working to rise to the occasion.

BLOG

Is the Food Industry Ready for Kunming? The Short Answer Is No. 

ESG Research

Over the past two years, a growing number of governments have stepped up their plans to protect biodiversity. The most affected industry: Food products, which may face rising regulatory costs and reduced fiscal subsidies. What are the risks to investors?

BLOG

New Frontiers in Carbon Footprinting: Private-Equity and -Debt Funds 

ESG Research

Private-capital funds, which can quickly make large investments in specific targets, are potentially powerful agents in the fight against climate change. But where do private-equity and -debt funds stand in terms of their estimated carbon-emission intensities?

BLOG

Climate Matters: What’s in an ESG Rating. And What’s Not. 

ESG Research

ESG ratings are widely used in active management and ESG indexes, with a growing focus on climate change. This has increased debate around two questions: Why are ESG ratings so different across providers? And how do ESG ratings reflect climate risk?

BLOG

Beginning to Understand the Performance of Social Properties 

Real Estate Investing

The precise measurement of social impact is in its early stages. But some property sectors like affordable housing have obvious links to social themes, and investment in these “social properties” has increased significantly over the last 10 years.

BLOG

Controlling Idiosyncratic Risk in Value Strategies 

Factor Investing

We looked at ways to mitigate some of the performance drag of stock-specific risk on value strategies over the last decade by directly controlling for this risk without negatively affecting value-factor exposures or contributions.

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After Evergrande: Bond Liquidity of Chinese Property Developers 

Fixed Income , Risk Management , Global Investing

Evergrande, one of China’s largest and most indebted property developers, had a recent close brush with bankruptcy that generated considerable concern among global bond investors. In this time of distress, how has market liquidity responded?

BLOG

Can Green Spreads Uncover ESG's Influence on Bond Prices? 

ESG Research , Fixed Income

Investors increasingly seek to build portfolios that have reduced exposure to climate-transition risk. How might these changes in investor behavior have affected prices in the corporate-bond market?

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How Climate Change Affected Thirsty Chipmakers 

ESG Research

In the face of increasingly frequent and severe climate hazards around the globe, water constraints appear to be emerging as an important factor impacting the Taiwanese semiconductor industry and global supply chains.

BLOG

Focusing a Sustainability Lens on China’s Regulatory Changes 

Global Investing

Market fundamentals may not be significantly affected by new regulations in China. But, given the regulations’ focus on ESG-related issues, investors can use ESG data as they seek to identify risks and opportunities across industries and securities.

BLOG

How Climate Change Could Impact Credit Risk 

ESG Research , Fixed Income , Risk Management

Investors are increasingly focused on gauging the risks related to climate change. We investigated how various climate scenarios could impact the credit risk of portfolios. In one scenario, 16% of investment-grade issuers could migrate to high yield.

BLOG

Could Factors Help Explain Asset-Level Real Estate Performance? 

Real Estate Investing , Factor Investing

For real estate investors, property type and geography segmentations are the primary lens through which they measure and manage their portfolios. Testing five potential real estate style factors, however, were we able to better explain asset-level variation.

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How to Achieve Net Zero? Leaders Weigh In 

Global Investing

How can investors help accelerate the net-zero transition? This was the central question at MSCI’s 2021 Global Investing Conference. We present the core takeaways from the two-day event, which featured senior corporate and investment thought leaders.

BLOG

Understanding Carbon Exposure in Private Assets 

ESG Research

Public companies and managers of listed assets face growing disclosure requirements. But private companies have not received the same level of scrutiny. How can investors in private assets calculate their exposure to carbon emitters, and what can they do about it?

BLOG

Creeping Crypto: Cryptocurrency Risk and ESG 

ESG Research

Institutional investors may have more exposure to cryptocurrency risk than they realize. We find that cryptocurrencies were a part of business for at least 52 companies covered by MSCI ESG Research, including 26 MSCI ACWI Index constituents.

BLOG

Stress Testing Portfolios for Climate-Change Risk 

ESG Research

How quickly companies implement net-zero pledges can affect the value of investments. Stress testing can be used to test how the valuation of a portfolio could change under different climate transition speeds or scenarios chosen by the investor.

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Factors in Focus: Where’s the Value in Defensive Positioning? 

Factor Investing

Throughout the third quarter, investors shifted attention to risks from inflation, tapering and potential interest-rate rises. We analyze global equities and the rotation toward defensive factors.

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Constructing Net-Zero Portfolios: Three Approaches 

ESG Research

While investors around the world are committing to bring the carbon footprints of their portfolios to net-zero by 2050, figuring out how to do so is not a simple matter. What alternatives do investors have?

BLOG

Industry Momentum Across Regions 

Factor Investing

We expand on our analysis of industry momentum to assess the persistence of a premium across different regions and the ability of a rules-based strategy to help investors as they seek to capture this premium.

BLOG

Real Estate’s Income Risk in the Wake of COVID-19 

Real Estate Investing

COVID-19 has weighed heavily on the financial positions of companies that hold leases for commercial real estate. Property investors can track the covenant quality of their tenants and translate it into a probability of default over the length of the lease.

BLOG

The Impact of China’s New Regulations: A Thematic Lens 

Global Investing

Regulatory changes in China have investors wondering how different industries could be affected. Evaluating the changes through a thematic lens can provide insight into the growth and crowding levels of megatrends, as industries react and evolve.

BLOG

Measuring the Temperature of Your Portfolio 

ESG Research

Institutional investors are setting targets to align their portfolios with a 1.5˚-2°C global warming scenario. But measuring and reporting portfolio temperature rise remain challenging. How can investors measure the temperature of their portfolios?

BLOG

Regulatory Risk Rises for South Korean Employers 

ESG Research

Are South Korean companies ready to deal with the country’s new workplace-safety law? Our research finds that many of those companies — often located in the machinery and metals and mining industries — are ill-prepared.

BLOG

How a Shift Toward Buybacks Affected Yield Strategies 

Global Investing , Factor Investing

For investors who use yield strategies to generate income, a steady stream of dividend payments is important. But with more companies using buybacks as a way to redistribute profits, investors may want to consider a more holistic view of income.

BLOG

Benchmarking Pan-Regional Real Estate Funds 

Real Estate Investing

Real estate investors have increasingly sought pan-regional funds to diversify globally. But such funds’ exposures can be significantly different from the market at large. What’s an appropriate benchmark for these diversified fund investments?

BLOG

Regulatory Risk Rises for South Korean Employers 

ESG Research

Are South Korean companies ready to deal with the country’s new workplace-safety law? Our research finds that many of those companies — often located in the machinery and metals and mining industries — are ill-prepared.

BLOG

Building Climate-Aware Factor Portfolios 

Factor Investing

Factor investing typically involves both security selection and alternative weighting based on security-level factor exposure. If such a strategy also needs to be climate-aware, what is the cost in terms of target-factor erosion?

BLOG

A Sector-Balanced Approach to China A Mega-Cap Exposure 

Global Investing

For investors seeking exposure to the mega-cap segment of the China A market, a simple top-50 market-cap-weighted approach can lead to large sectoral biases. We explore how a balanced mega-cap approach may help.

BLOG

Sizing Up Small Caps 

Factor Investing

Given small-cap outperformance since March 2020, investors are asking how these stocks size up in terms of short-term valuation, sentiment and macro outlook? Longer term, might small caps help capture opportunities around thematic investing megatrends?

BLOG

Housing-Bubble Déjà Vu 

Risk Management

The U.S. in the past year recorded the highest national house-price appreciation in recent decades. Does the run-up in home prices represent housing-bubble déjà vu? And what can MBS investors do to assess their mortgage credit risk?

BLOG

Assessing Private Infrastructure in a Multi-Asset-Class Portfolio 

Real Estate Investing , Risk Management

Private infrastructure is a popular element of institutional capital allocations, and increased focus on renewable or carbon-neutral infrastructure may mean significant new investment opportunities. What role could it play in a multi-asset-class portfolio?

BLOG

Fresh IPO Stocks and Indexes: In or Out? 

Global Investing

Depending on a number of factors, stocks may be added to indexes soon after a company’s IPO, which can affect asset managers who use the indexes to create and benchmark portfolios. We investigate the impact of IPO stocks on index performance.

BLOG

Managing Against MBS Indexes: A Duration Perspective 

Fixed Income , Risk Management

Mortgage-backed securities constitute a significant portion of fixed-income indexes. Managing MBS portfolios against these indexes depends heavily on an understanding of the dynamics of MBS duration, especially in volatile markets.

BLOG

Could Factors Have Explained Cryptocurrency Risk? 

Factor Investing

As cryptocurrencies rise in popularity as investment vehicles, the need for standardized tools for this market increases as well. We created a multifactor model to measure whether factors important for equity markets were also important for crypto.

BLOG

Are SPACs Riskier than Conventional IPOs? 

ESG Research

SPACs exploded in popularity in 2020, but these “blank-check” shell IPOs offer some unusual governance risks to investors. In this blog post, we examine some of the challenges.

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Credit Strategies During the COVID-19 Crisis 

Fixed Income , Risk Management

Short-term credit spreads widened to a greater extent than long-term spreads during the March 2020 COVID-19 crisis. As a result, many U.S. corporate-issuer spread curves flattened or even inverted. What were the implications for corporate-bond investors?

BLOG

COVID-19’s Uneven Impact on Office Vacancy 

Real Estate Investing , Global Investing

What was the precise impact of the COVID-19 crisis on office properties? While the overall vacancy rate at the end of 2020 was lower than the previous cycle’s peak, the percentage of fully leased office buildings reached an all-time low.

BLOG

What Could a Rate Hike Mean for Portfolios? 

Fixed Income , Risk Management

Although the Federal Reserve may not begin raising rates anytime soon, U.S. and global markets are scrutinizing the Fed’s communications about the likely course of policy actions. We consider three scenarios for the timing of policy responses.

BLOG

亚太高ESG风险公司是否正在“除弊去疴” 

ESG Research

亚太市场公司的MSCI ESG评级通常低于全球同业公司。但这种情况正在快速变化，即使是某些表现最差的行业（例如能源和原材料）也开始改善其ESG实践。

BLOG

Are APAC’s High-ESG-Risk Stocks Cleaning Up Their Act? 

ESG Research

The APAC region’s ESG performance has suffered from a combination of low ESG adoption and awareness and limited ESG regulation and reporting. But marked improvements are surfacing in environmental and social performance in certain sectors

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Hedging Inflation with Equities 

Global Investing , Factor Investing

Equities have traditionally been viewed as a hedge against inflation, based on the assumption that companies’ revenues adjust for inflation over time. But what has been the short-term impact on equity portfolios?

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How Might Inflation Impact Funding Ratios? 

Risk Management

We analyzed two multiperiod inflation scenarios to understand how the funding ratios of defined-benefit pension funds could evolve in each and what they could mean for a pension fund in terms of special contributions over the next 10 years.

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Active-Management Opportunities in a Disperse Market 

Factor Investing

Disperse markets have historically provided opportunities for active managers to outperform their respective benchmarks. We showed that, based on historical trends, CSV helped shed light on identifying where the dispersion was greatest.

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What Can Liquidity Tell Us About ETF Prices? 

Integrated Risk Management , Risk Management

As thematic equity ETFs have grown in popularity, concerns have been raised about their liquidity — especially when an ETF holds a large fraction of a constituent’s shares. How can ETF investors get a handle on this risk? 

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Eyeing the Crowds from Multiple Perspectives 

Factor Investing

We observed historically notable crowding across factors, industries and stocks through the first half of 2021. Examining crowding from multiple perspectives and incorporating multiple data elements provides investors a more holistic view. 

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Chinese RMBS: A Way to Diversify Fixed-Income Portfolios? 

Fixed Income

The market in Chinese residential mortgage-backed securities is growing, as global investors are eying the segment’s relatively high yield and potential for diversification, but seeking improved credit ratings and transparency in data and pricing.

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Factors in Focus: Go with the Flow? 

Factor Investing

In the latest edition of Factors in Focus, we look at flows into equity factor ETFs and whether it has been profitable, historically, to follow the money, along with our analysis of factor and factor-index performance over the second quarter.

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Purifying Value 

Factor Investing

Unintended exposure to non-value factors was a large contributor to value’s period of underperformance. We investigate value-portfolio construction when controlling for these exposures while maintaining maximum exposure to value factors.

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Translating Climate Goals into Action in Real Estate Portfolios 

Real Estate Investing

Many investors have made bold commitments to transition their real estate portfolios to net-zero carbon emissions and are now developing and implementing plans to achieve this goal. But what could this transition look like in practice for property portfolios?

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Securitized Products’ LIBOR Transition Picking Up Pace 

Fixed Income

In 2021, there has been significant progress in the transition from the LIBOR reference rate to its replacement, SOFR. But investors in securitized products are grappling with the challenge of the LIBOR-SOFR transition and its impact on their analytics.

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CDS Fading as a Measure of Value in Emerging Markets 

Fixed Income

Credit investors use spreads to compare relative value and risk. Studies of emerging-market sovereign debt have shown that credit-default swaps tended to be a better measure of value than spreads computed from bonds. But is it still the case?

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What Can Loan-Level Data Reveal About US Auto-Loan ABS? 

Fixed Income , Risk Management

U.S. regulators required issuers by Nov. 23, 2016, to disclose data on individual loans bundled into auto-loan asset-backed securities. We looked at whether incorporating loan-level data into our model could sharpen our analysis of this ABS segment.

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Escaping to Equities for Yield 

Factor Investing

In today’s low-rate world, some investors shifted toward historically higher-yielding equities. For others, especially in the insurance industry, the greater risk limited their ability to do so. Was a minimum-variance equity approach a viable option?

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Mining’s Impact on Biodiversity: A Rising Risk? 

ESG Research

Will biodiversity losses become the next crisis facing humanity, possibly surpassing climate change? Growing scrutiny on biodiversity risks could have implications for mines that threaten biodiversity or environments of high conservation value.

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Mining Energy-Transition Metals: National Aims, Local Conflicts 

ESG Research

Investors are scouting for companies that mine the metals needed in new energy technologies. But some mining projects key to the transition from fossil fuels may face opposition from Native Americans for threatening sacred areas or traditional ways of life.

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Momentum on a Value Hunt 

Global Investing , Factor Investing

Momentum, by definition, rotates into securities with recent outperformance. That said, investors who view value and momentum as contra-signals may have questions about the value-momentum convergence and the divergence of momentum and growth.

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Exxon Mobil: Drilling Down on the Proxy Vote 

ESG Research

The historic win of at least two seats on Exxon Mobil’s board by activist shareholder Engine No. 1 signals a dramatic shift in investors’ thinking about climate change — and in their willingness to vote for climate action. But there is a deeper story.

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Bitcoin: Good as Gold? 

Factors , Risk Management

During inflationary periods, equity investors, historically, have turned to gold as a hedge and diversifier. As the issue of inflation becomes more pressing, we ask whether cryptocurrencies, such as Bitcoin, could have played a similar role.

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Real Estate’s Climate-Transition Risk: The Path to Net-Zero 

Real Estate Investing , Risk Management , Global Investing

The 2015 Paris Agreement seeks to keep the rise in global temperature to well below 2 degrees Celsius above pre-industrial levels, and many governments are aiming for 1.5°C through nationally determined contributions. What are the implications for real estate markets?

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Race & Ethnicity Disclosure: US Companies’ Rocky Start 

ESG Research

Violence against the Black and Asian American communities in the U.S. has put racial injustice in the global spotlight. But the lack of standardization in reported data on race and ethnicity has greatly hindered comparability.

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The Pressure of the Crowd: Stress Testing Thematic Indexes 

Equity Themes , Risk Management , Global Investing

Some investors may be concerned about crowding within the fast-growing thematic-investing segment. Using MSCI’s stock-crowding model, we identify crowded themes and run stress tests to understand how they might respond to an equity sell-off.

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What Really Drove Value and Growth Fund Performance? 

Factor Indexes , Factors

Many look to market-cap indexes when comparing the performance characteristics of growth and value funds — including manager skill. We found a switch to style indexes reduced industry- and style-factor contributions and made manager skill more apparent.

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Are Your Clients Ready for US Tax Day? 

Risk Management

Given the complexity of U.S. tax regulation, wealth advisers continue to grapple with how to build tax-efficient portfolios while balancing clients’ other objectives. We propose a rules-based way of doing so and analyze its benefits and trade-offs.

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Why Is Climate-Transition Risk High in High Yield? 

ESG Research , Fixed Income , Risk Management

Investors increasingly focus on building greener portfolios. Some might expect bonds to be less exposed to climate-transition risk compared to equities, due to the seniority of bonds in the capital structure. But does that logic hold at the portfolio level?

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The Theory of (Value) Relativity 

Factor Investing

Whether constructing a fundamental factor model, a value strategy or a value index, valuation ratios need context. Time-series and cross-sectional approaches each have pros and cons. But combining the two may have presented a clearer picture. 

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Bringing Value to the 21st Century 

Factors , Global Investing

In the second post in our series, we further probe value’s underperformance over the past decade and ask if the historic definition of value remains relevant. We specifically look at whether a company’s valuation can be enhanced by reflecting R&D investments. 

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How Office Real Estate Performed amid COVID 

Real Estate Investing

COVID-19 disrupted real estate across countries and property segments. The biggest initial impacts were felt in retail, leisure and hotels. But more recently, the performance of listed offices has lagged.

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Modern Slavery: The Unseen Risks 

ESG Research , Global Investing

Modern slavery occurs all over the world and can impact virtually all industries. Meanwhile, regulations requiring more detailed reporting on potential supply-chain exposure is increasing. How can investors identify portfolio holdings most at risk?

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Factor Investing Held in High-Volatility/-Concentration Period 

Factor Indexes , Factors , Risk Management

U.S. equity markets have experienced increased volatility coupled with concentration in a handful of megacap companies. Has this hampered investors’ ability to capture factors effectively? Have stock-specific risks dominated factor indexes?

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Some ESG Funds Are Not Like the Others 

ESG Research , Global Investing

ESG funds’ holdings can vary significantly, depending on their objectives, methodologies and geographic exposures. We examined the 20 largest equity funds in our coverage universe.

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Could Investment Grade Be as Risky as High Yield? 

Fixed Income , Risk Management

Do high-yield and investment-grade bonds carry the same level of risk? For investors using common measures like value-at-risk models, IG- and HY-bond portfolios’ risk levels appear to have converged. But traditional models may miss important aspects of HY risk.

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Innovation Remix: Adding Thematics to Equity Programs 

Equity Themes , Factor Indexes , Global Investing

How can investors incorporate transformative, but volatile thematic investments while seeking to control for valuation and total and active risk? We examine three approaches that improved a portfolio’s “innovation profile” with modest changes to risk.

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Long-Horizon Risk: The Past 50 Years 

Fixed Income , Risk Management

For long-horizon investors that aim to ride out volatility, short-term risk measures may be insufficient. We used multiperiod stress testing to evaluate one- and five-year returns of hypothetical multi-asset-class portfolios using 50 years of history.

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Including Microcaps in Benchmark Indexes: Japan vs. US 

Equity Themes , Global Investing , Factor Investing

Selecting an equity benchmark may mean balancing market coverage and investability. For example, exhaustive coverage may include microcap stocks, with lower liquidity and investment capacity. But excluding them may reduce low-size-premium exposure.

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Factors in Focus: Value Springs into Action 

Factor Indexes , Factor Investing

Value has historically outperformed in economic recoveries. With the reopening of the global economy we examined value’s performance against other factors, and exposures from our adaptive multi-factor model at the end of Q1. 

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Reopening Economies and the Resurgence in Value 

Factor Indexes , Global Investing , Factor Investing

After 15 years of challenging performance, many have asked if value is still a valid investment strategy. But the reopening of the global economy following vaccination rollouts has reignited interest across stocks, sectors, countries and regions.

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Open- vs. Closed-End Real Estate Funds: How the Choice Mattered 

Real Estate Investing

The aggregate performance of closed- and open-end real estate funds in the U.S. was strikingly similar in recent years, despite large differences in their strategy and roles in portfolios. But did some investors gain an edge through fund selection?

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Value-Performance Anxiety 

Global Investing , Factor Investing

Despite a recent performance lift, many still ask whether the value factor is broken. We analyze the reasons behind its underperformance and start exploring the potential of updates to value definitions and approaches to value-portfolio construction.

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CEO Compensation: Paying Up for Mediocrity 

ESG Research

Are companies aligning CEO pay with long-term performance? Or, put another way, are directors incentivizing executives to drive the long-term success of the companies they run? We found evidence that pay and performance are misaligned for many U.S. CEOs.

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Considerations for Dedicated China Equity Allocations 

Emerging Markets , Global Investing

China provides global equity investors a unique set of opportunities and challenges as they evaluate a potential dedicated investment program and how to approach asset allocation from policy configuration to portfolio implementation.

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中国专业股票配置的要点 

Emerging Markets , Global Investing

鉴于中国进一步开放金融市场，一些投资者指定了一个专门计划来负责处理与中国相关的一系列投资机会。

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Managing the Risks of LIBOR Replacement 

Fixed Income , Risk Management , Global Investing

Investors now have clarity on the process of transitioning away from LIBOR and falling back on replacement benchmark rates. We used stress tests to show that fallback modeling may be necessary to measure and manage the risks of LIBOR instruments.

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The Pace of Fast Change: Growth vs. Thematic Investing 

Factor Indexes , Factors , Global Investing , Factor Investing

Investors considering thematic investments to gain exposure to firms whose fortunes may not be captured by fundamental growth measures, may ask: What are the key opportunities – and challenges – that distinguish thematic from growth investing?

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Is There a Hedge-Fund-Crowding Factor? 

Factor Investing

Hedge funds held heavy, relatively illiquid short positions in crowded stocks before the January 2021 short squeeze. We created a risk factor that added explanatory power and may provide insights into potential short squeezes and other risks.

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Are Growth and Value Indexes Still in Style? 

Factor Investing , Risk Management , Global Investing

Growth and value indexes were created in the 1980s as finer tools than market-cap indexes to measure the performance of growth and value funds. Are style-specific indexes still a relevant choice to use as benchmarks for these funds?

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Women on Boards: The Hidden Environmental Connection? 

ESG Research

With social inequality gaining prominence ahead of the 2021 proxy season, investors and other stakeholders are increasingly vocal about the need for greater diversity in corporate boardrooms. How successful have boards been globally?

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How Inflation Could Affect Multi-Asset-Class Portfolios 

Real Estate Investing , Fixed Income , Global Investing , Integrated Risk Management

Market participants are hotly debating whether U.S. monetary and fiscal policy may cause inflation. We consider four scenarios — reflation, disinflation, an overheated economy and stagflation — and their potential impact on multi-asset-class portfolios.

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How Have Stocks Responded to Changes in Climate Policy? 

ESG Research , Global Investing

To what extent has climate risk been priced into equity markets? Is there a “brown” discount and a “green” premium? Has this shifted over time? How can we model such risks as the world moves toward net-zero targets? We examine the financial impact of climate transition risk on global equity markets.

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Factoring in ESG 

ESG Research , Factor Investing , Factors

How much does ESG contribute to portfolio risk and return? We looked at whether ESG performance was influenced by other factors or helped explain returns as a factor in its own right, using the MSCI Global Equity Factor Model + ESG.

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Finding the Sentiment Hidden in Regulatory Filings 

Factor Investing

Using natural language processing techniques, we constructed a sentiment factor that quantifies changes in the tone and content of company filings, and may be an indicator of future risks facing a company.

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Climate Transition and Bonds: Risk or Opportunity? 

ESG Research , Fixed Income , Risk Management

The transition to a low-carbon economy could significantly redirect the flow of investments toward greener companies and technologies that limit carbon emissions. We consider the potential risk — and opportunity — for bond investors.

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Currency-Risk Hedging in Real Estate Benchmarks 

Real Estate Investing , Risk Management , Global Investing

Global real estate investors can expose themselves to currency risk. Using a hedged index, they may better align their benchmark and investment approach and ensure currency risk is accurately treated in allocation modeling and performance attribution.

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A New COVID-19 Regime for MBS? 

Fixed Income , Integrated Risk Management

In 2020, the Federal Reserve’s purchases of mortgage-backed securities, low interest rates, mortgage-underwriting policy changes and technology advancements led to a historic refinance frenzy and posed an unprecedented challenge for MBS risk management.

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Are (Stock) Bubbles Rising? 

Factor Investing

How does one identify or quantify a bubble? We propose a framework for assessing the “bubbliness” of stocks and portfolios, rooted in the idea that bubbles are driven by the same forces, and share characteristics with crowded trades.

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Cross-Currency Credit Spreads: Mind the Gap 

Fixed Income , Risk Management

An issuer’s credit spread should be consistent when measured in the USD- or EUR-denominated markets, because both are measuring the same credit risk. Yet divergence can occur as a result of liquidity or supply-demand imbalances, such as those in the COVID crisis.

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How Are High-ESG-Rated Bond Portfolios Distinct? 

Fixed Income , Risk Management , ESG Research

ESG investing makes up an increasingly large footprint in equity portfolios, but ESG integration in bond portfolios is still in its early days. We examine the characteristics that make high-ESG-rated corporate-bond portfolios distinct.

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COVID Stimulus Helped Resilience of US ABS 

Risk Management , Fixed Income

Issuance of U.S. asset-backed securities fell by a quarter in 2020 from the previous year, as credit tightened during the COVID-19 crisis. The performance of loans underpinning ABS proved resilient, however, as economic relief helped support consumers.

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Stress Testing Climate-Change Scenarios 

Global Investing , ESG Research

Regulators around the world are upping the ante on climate-related financial disclosures. How can investors stress test potential exposures to these changes in policy? We take a look within Europe.

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An ‘ESG-First’ Approach to Portfolio Construction 

ESG Research

A new administration in the U.S. and ESG-related regulations in Europe may further increase investors’ sustainability focus. We examine an “ESG-first” approach to integrating measurable ESG and climate considerations into portfolios.

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What Biden’s Climate Plan Means for US Utilities 

ESG Research

Joe Biden is targeting net-zero carbon emissions in the United States by 2050, but the target date for electricity generation would come 15 years sooner. Are the U.S. utilities sector and investors prepared for net-zero emissions by 2035?

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Carrying on Through a Crisis, with Factors 

Factor Investing , Risk Management , Fixed Income

Factors have long had a place in constructing equity portfolios, but investors increasingly use factors in sovereign and corporate bonds, commodities and currencies. Which non-equity factors have been the best performers coming out of recent crises, and why?

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2021 Real Estate Trends to Watch 

Real Estate Investing

COVID-19 has caused a severe and rapid economic contraction and accelerated secular changes already hitting parts of the real estate markets. Investors face a fundamental question: How will real estate evolve as a sector and asset class? Here are our 2021 real estate trends to watch.

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Factors in Focus: Val-come Back! Shifting Factors as the Cycle Turns 

Factor Investing

In this two-year-anniversary edition of Factors in Focus, we reflect on the historical relationships between factor returns and macro cycles, which have provided useful information for investors looking to take an active stance on factor exposures based on their outlook.

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A Thematic Lens for Portfolios 

Global Investing

We 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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The Doctor Is Making House Calls: Capturing Exposure to Telehealth 

Factor Investing , ESG Research

Telehealth has the potential to reduce inequalities in access to care as well as relieve strain on health systems. We tested an approach that combines natural-language processing and MSCI ESG Ratings screens.

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Kuwait’s Move from Frontier to Emerging Market 

Global Investing

Kuwait’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 

Global Investing , Emerging Markets , Economic Exposure

Despite 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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Is ESG Investing a Price Bubble? Probably Not. 

ESG Research

Inflows into ESG funds have soared in recent years and months, in part motivated by outperformance since the COVID-19 pandemic erupted. But have these inflows become a self-fulfilling prophecy, creating an ESG bubble?

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Private-Infrastructure Risk: Tilting at Windmills 

Risk Management

Private-infrastructure investments are often treated as comparable to relatively safe long-duration bonds with attractive yields, but this approach can mislead investors as they evaluate risk, yield and portfolio hedges.

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2021 ESG Trends to Watch 

ESG Research

Climate. ESG bubbles. Disclosure. Social inequality. Biodiversity. The topics don’t get much bigger — or more systemic. Here’s our analysis of the five ESG trends that will matter most to companies and their investors in 2021.

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2021年ESG 趋势展望 

ESG Research

ESG投资已日趋成熟，炒作和怀疑已经消退，但寻求实现《巴黎协定》目标的投资者开始发现，符合《巴黎协定》要求的投资机会越来越少。

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China Tech Investing: An Indexed Approach 

Global Investing

China’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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中国科技投资：一种股指编制方法 

Global Investing

经过数十年的快速经济增长，中国开始将发展重点从出口和固定资产投资转移到国内消费和技术创新。

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COVID-19 and Office Income: What Could Lie Ahead? 

Real Estate Investing

With new COVID-19 lockdowns and swaths of white-collar workers working from home, many office tenants are contemplating whether the future of work includes office space. This could have significant impact on office demand and income from leases.

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How Diversified Are US Equity Investors? 

Global Investing

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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The CDS Market Stayed Healthy amid COVID 

Risk Management

Since the global financial crisis, many have expressed concern about the health and future of credit-default swaps. Could institutional investors find the liquidity they need to hedge credit risk in subsequent periods? We examine CDS liquidity during the COVID-19 crisis.

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Stress Testing Multiperiod Inflation Scenarios 

Fixed Income , Risk Management

Will inflation rear its ugly head in the U.S.? Although the outcome of the U.S. elections might have lowered inflation expectations, investors can prepare for scenarios where inflation goes up. In this stress test, we examine three scenarios for inflation over varying time horizons.

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Investor Reaction to US Elections and COVID-Vaccine Progress 

Factor Investing , Risk Management , ESG Research

To gauge investor expectations after Joe Biden was declared winner of the U.S. election and good news broke about COVID vaccines, we surveyed 151 U.S.-based financial advisers. We examine the advisers’ views on the next 12 months and markets’ reaction since Election Day.

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Did Size Matter for Small-Cap Outperformance? 

Factor Indexes , Factor Investing , Factors

Good vaccine news on Nov. 9 drove unusual equity-index and factor returns, including in small caps. The MSCI USA Small Cap Index returned 3.03% that day vs. 0.82% for the MSCI USA Index. Was this due to the size factor, or was there a bigger story?

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Are Momentum’s Wings Finally Starting to Melt? 

Factor Investing , Factors

Positive vaccine news on Nov. 9 caused big moves in industry and style factors. Those hit hardest this year jumped, while previous high performers slumped. Did this mark new factors leadership and a long-awaited rotation from momentum to value?

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Chinese Government Bonds: Higher Yield, Less Risk? 

Global Investing , Risk Management

Global investors’ interest in Chinese government bonds has risen, as these bonds offer higher yields than developed-market sovereign debt. For investors thinking about adding Chinese bonds to their portfolios, what could be the impact on portfolio risk?

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What ESG Ratings Tell Us About Corporate Bonds 

ESG Research , Risk Management

How did incorporating ESG factors affect the performance of corporate-bond portfolios? Did ESG add insights beyond credit ratings? How did ESG impact risk and performance of investment-grade and high-yield bonds? Short-dated versus long-dated bonds?

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ESG 评级告诉我们有关公司债券的哪些信息? 

ESG Research , Risk Management

我们探讨了将环境、社会和治理相关（ESG）因素纳入考量，对公司债券投资组合风险和表现的影响。

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Will Interest Rates Surge? Evidence from Options Markets 

Fixed Income , Risk Management

With long-term interest rates near record lows, conventional wisdom suggests that they can only go up. But the interest-rate option markets seem to be telling a different story — that rate decreases are also a distinct possibility.

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China A Shares: What Have We Learned? 

Emerging Markets , Global Investing

In 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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Zombies on Board: Investors Face the Walking Dead 

ESG Research

Investors may think that zombies live only in people’s imaginations, but these brain-munching monsters can haunt corporate boardrooms for years, eating away at a fundamental shareholder right: the right to duly elected representation.

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Was Infrastructure Solid During COVID-19? 

Real Estate Investing , Risk Management

Infrastructure investments have not been spared the effects of the pandemic. A closer look across investment types, subsectors and risk levels over time may provide useful perspective as private-capital firms and their investors manage through.

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Aligning with the Paris Agreement: An Index Approach 

ESG Research , Global Investing

Institutional 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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Is US Equity Overvalued? A Macro View 

Equity Themes , Risk Management

Headed into what some see as “the second wave” of COVID-19, U.S. equity investors may ask: Is this a sustainable market recovery, or a bubble that may burst? We examine the question with our model for market-implied U.S. equity risk premium.

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How Portfolio-Weighting Schemes Affected Factor Exposures 

Factor Investing , Factor Indexes , Factors , Risk Management

Single-factor portfolios seek high exposure to a target factor and limited exposure to non-target ones. We assess the impact that common portfolio weighting schemes have on these exposures, as well as on portfolio efficiency, concentration and investability.

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Using Factors As a Magnifying Glass for Equities 

Factor Indexes , Factor Investing , Factors

Factors have been shown to be important systematic sources of risk and return. We examine how factor analysis can help identify investment characteristics that lie beneath the surface of seemingly similar stocks and equity portfolios.

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Could COVID-19 Topple Global Cities' Dominance? 

Real Estate Investing

Property investors turned to global gateway cities to diversify portfolios and generate capital growth in the years since the 2008 global financial crisis. We assess whether COVID-19 could jeopardize the relative dominance of these power cities.

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Factors in Focus: Impact of Inflation on Style Factors 

Factor Investing , Global Investing , Risk Management

Global 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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Banks, ESG and Nonperforming Loans During Covid-19 

ESG Research

Have banks with stronger ESG risk management practices been more financially resilient during the COVID-19 pandemic? We look at the asset quality, profitability and capitalization of banks around the world.

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Hertz So Good? 

Fixed Income , Risk Management

We look at the unusual bankruptcy of Hertz Global Holdings Inc. — whose equity rallied in early June, when holders of Hertz bonds were expecting losses as high as 90% in default — to discuss the importance and subtleties of firms’ capital structures.

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Can MBS Duration Turn Negative? 

Fixed Income , Risk Management

As mortgage rates have hit record-breaking lows, prepayment speeds have doubled. With the combination of a high price premium and elevated prepayment speed, could duration of mortgage-backed securities stray into negative territory?

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Stress Testing Inflation Scenarios 

Fixed Income , Risk Management

Market-implied expectations indicate modest inflation. But some observers are concerned inflation may significantly rise, while others fear deflation. We discuss four inflation scenarios — and their potential implications for stocks and bonds.

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Corporate ESG Disclosure: A Health & Safety Case Study 

ESG Research

How good a job are corporations doing in disclosing ESG policies and data to investors and other stakeholders? We took an in-depth look at reporting of health & safety disclosures. Our findings confirmed some common assumptions and upended others.

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Scope 3 Carbon Emissions: Seeing the Full Picture 

ESG Research

How can investors identify emissions throughout the value chain of companies in their portfolios? We explain what these “Scope 3” emissions are, why they are so important and what actions investors can take as they seek to manage resulting risks.

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Bond Liquidity: How Bad Was COVID? 

Risk Management

Was bond liquidity worse during the COVID-19 outbreak or the 2008 global financial crisis? We analyzed transaction costs from the forced selling of USD 10 million of U.S. corporate bonds, throughout the two crises.

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Assessing Company Alignment with UN SDGs 

ESG Research , Global Investing

Five 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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Missed Rents’ Impact on Real Estate 

Real Estate Investing , Fixed Income

Some commercial tenants have stopped paying rent amid COVID-19. Without rental income, property funds are not able to pay distributions to shareholders and borrowers cannot service their debt. We analyzed property-fund data to assess the impact on investors.

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How to Describe a Factor 

Factor Indexes , Factor Investing , Factors

How to define a factor? It’s a challenge for asset owners and wealth managers in evaluating how well factor products meet investment objectives. We found an improved and more robust measure can be formed by combining multiple descriptors. 

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Identifying Emerging “Hot Spots” for Physical Risk in the US 

ESG Research

Climate change is expected to increase the frequency and severity of physical climate risks such as extreme temperatures, tropical cyclones, torrential rainfall and flooding. Our map identifies emerging climate risk hotspots in the U.S. 

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Are Securitized Products Ready for the LIBOR-SOFR Transition? 

Fixed Income , Integrated Risk Management

Will the securitization industry be ready for the transition from LIBOR to the secured overnight financing rate (SOFR), as it faces the fact that LIBOR can no longer be guaranteed beyond the end of 2021? As the industry mobilizes, significant challenges remain.

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ESG in Mexico: At a Fork in the Road? 

ESG Research , Emerging Markets , Global Investing

Mexican 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 

Emerging Markets , Global Investing , Risk Management

Institutional 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 

Integrated Risk Management , Fixed Income , Global Investing , Risk Management

Aggressive actions by central banks and soaring government budget deficits have raised concerns among some investors that inflation may significantly rise. We examine whether an inflation hedge was worth the cost over the past 13 years.

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Is There a Green-to-Fossil-Fuel Premium? 

ESG Research

As investors evaluate the possible reallocation of capital around the transition toward a low-carbon future, we analyzed the characteristics and performance of companies engaged in green versus carbon-intensive activities. Was there evidence of a “green-to-fossil-fuel premium”?

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绿色能跑赢化石燃料吗？ 

ESG Research

从 2013 年 12 月到 2020 年 5 月，“绿色”公司的表现大致与 MSCI全球市场可投资市场指数（IMI）持平，而化石燃料公司的表现则逊于该指数。

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Understanding the Industry-Momentum Factor 

Factor Investing , Risk Management , Global Investing

When 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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Growth Without the Side Effects 

Factor Indexes , Factor Investing , Factors

Growth has sometimes been viewed as the opposite of value. By extending the concept of growth at a reasonable price, we were able to capture the growth premium without it being lost to unintended factor exposures.

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The Risk of Risk Limits 

Risk Management

In times of heightened volatility, risk limits can protect against equity-market drawdowns. While such measures can dampen portfolio losses, they may also have an impact on long-term returns, particularly in case of a sharp V-shaped market recovery.

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Index Futures and the Expansion of Equity Markets in EM and Asia 

Global Investing , Emerging Markets

Given 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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Did Bonds Deliver? Leveraging Fixed Income During the COVID Crisis 

Fixed Income , Risk Management

Investors may employ leverage with lower-risk asset classes such as bonds to seek higher risk and returns. We assessed the effects of leverage on the returns of three hypothetical multi-asset-class portfolios during the COVID-19 crisis.

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Corporate Bonds Through a Factor and ESG Lens 

ESG Research , Factor Indexes , Factor Investing , Factors , Fixed Income , Risk Management

COVID-19 has had a profound impact on how companies manage cash flows and liquidity. Bond investors face the possibility of increased leverage, rating downgrades and defaults. Can factors and ESG metrics shed light on these risks?

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Managing Climate Risk in Equity Portfolios: A Case Study 

ESG Research , Global Investing

Institutional 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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Measuring Firms’ Remote-Workforce Abilities 

Factor Investing , Factors

It’s clear that some companies were better positioned to take advantage of a remote work environment than others. We built a hypothetical “remote-operation capacity” factor to seek to measure the effect on different firms.

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Up in Smoke? Brazil’s Wildfires May Affect Bond Spreads 

ESG Research , Fixed Income , Risk Management

Clearing Brazilian forests to make way for agriculture may spur a backlash to soy and beef producers if purchasers impose deforestation-free rules. What are the potential implications for debt of affected companies and for Brazilian sovereign debt?

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Measuring Climate Risk in Real Estate Portfolios 

ESG Research , Real Estate Investing

By evaluating real estate portfolios in terms of different physical risks as well as under different transition-risk scenarios, investors may be able to build a more complete picture of their exposure.

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Would Integrating ESG in Chinese Equities Have Worked? 

ESG Research , Emerging Markets , Global Investing

ESG 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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将 ESG 融入到中国股票的成效如何? 

ESG Research , Emerging Markets , Global Investing

过去两年，中国企业的 ESG 评级大幅提升。通过回测，剔除一些 ESG 评级低的股票，能够有助于一批聚焦中国的主动型基金在过去五年半时间内降低风险和提高投资回报。

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Factors in Focus: How Trendy Is Your Style Factor? 

Factor Investing , Risk Management

As markets rallied worldwide, investors took on high-beta exposure and rotated away from stocks with lower risk. The latest edition of Factors in Focus explores the details.

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Surging Corporate-Bond Supply: Reason to Worry? 

Fixed Income , Risk Management

In the months since the onset of the COVID-19 pandemic, companies issued a large amount of corporate bonds. As a result of this surge, corporate debt has grown substantially — a burden that institutional credit investors may wish to monitor closely.

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Did Value-Factor Exposure Deliver for Value Funds? 

Factor Investing , Global Investing

Building 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 

Global Investing , ESG Research

Our 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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Short Interest Factor Performance in Times of Crisis 

Factors , Factor Investing

Given recent short interest factor performance, we asked: What has been the relationship between this factor and large market drawdowns? Were there changes in short selling during COVID-19? Did short-selling bans affect short interest factor performance?

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COVID-19 and Real Estate: The Devil Is in the Dispersion 

Real Estate Investing , Risk Management

Many real estate markets were showing signs of a slowdown even before COVID-19’s negative impact on property portfolios. Has this correction been similar to previous ones? We looked at dispersion of returns, within and across real estate sectors, for the answer.

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Which ESG Issues Mattered Most? Defining Event and Erosion Risks 

Global Investing , ESG Research

Very 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. 

Global Investing , ESG Research

The 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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Consumer ABS: Recovering from Coronavirus? 

Risk Management , Fixed Income

After the U.S. COVID-19 lockdown, new monthly remittance reports for asset-backed securities indicated performance deterioration and signaled potential challenges ahead. Meanwhile, in China, ABS showed signs of recovery.

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中国A股市场ESG研究与实践 

ESG Research

ESG作为一项非常重要且日益受关注的内容，已经整合到投资过程中，与指数和分析工具相结合，参与投资组合构建。通常投资组合管理会考虑风险和收益等维度，而如今ESG正成为一个新的维度对最优化组合进行重新定义，并帮助投资人加强对投资组合ESG视角的审视和管理。

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Equity-Market Dislocation and Index-Based Investing 

Emerging Markets , Global Investing

Market 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 

Factor Indexes , Factor Investing , Global Investing

Though 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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Can AI Model the Complexities of MBS Prepayment? 

Fixed Income , Risk Management

Machine learning using neural networks has been successfully applied to fields in which extremely complex patterns can prove challenging for other algorithms. Are neural networks suited for modeling prepayment risk in agency mortgage-backed securities?

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Building Better ESG Indexes: 30 Years On 

Global Investing , ESG Research

How 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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Robust Selection Paid Dividends 

Global Investing

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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Four COVID-19 Scenarios: What Might Happen Next? 

Fixed Income , Risk Management

Our latest COVID-19 stress test looks at four potential financial-market outcomes ranging from a swift V-shaped recovery to a pessimistic L-shaped scenario, in which outbreaks recur and lockdowns return well into 2021.

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Five lessons for investors from the COVID-19 crisis 

ESG Research , Factors , Global Investing

COVID-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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Using Risk Analytics to Highlight Opportunities in Volatile Markets 

Risk Management , Fixed Income

Risk analytics can serve many functions for an institutional investor, including compliance, risk management, portfolio management and trading and strategy development. They may also highlight new opportunities that may be unique to volatile markets.

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Real Estate Asset Selection Mattered — Especially in a Crisis 

Real Estate Investing

As real estate strategies become more complex and market disruption continues, attribution analysis may prove a valuable tool. We looked at asset selection’s role in driving portfolios’ relative returns during relatively calm and disruptive periods.

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Index Rebalancing During High Volatility: A Balancing Act 

Global Investing , Emerging Markets

Significant 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 

Emerging Markets , Fixed Income , Global Investing , Risk Management

Beyond 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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How Hedge Funds Navigated the Start of COVID-19 Volatility 

Factor Investing , Factors , Risk Management

How did hedge funds navigate the initial volatility amid COVID-19? Though holdings information is limited, and delayed, we gained insights into their reaction by examining the change in hedge-fund portfolios between the end of January and end of February.

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Credit in the COVID Crisis: Contagion, Valuation, Default 

Fixed Income , Risk Management

As the COVID-19 crisis unfolded, credit markets deteriorated under the stress of a sharply diminished economic outlook. We analyze three indicators of credit-market conditions: default risk, relative value and contagion risk.

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Was the Treasury Price Right? Yield Dispersion Amid COVID-19 

Fixed Income , Risk Management

Despite appearances, Treasury yield curves are statistically estimated using price data from hundreds of Treasurys. We compared recent yield dispersion — or the degree to which individual bond yields fall away from the curve — to historical levels.

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Using Derivatives to Manage Volatile Markets 

Emerging Markets , Global Investing , Risk Management

We’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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Hunting a COVID-19 factor 

Factor Indexes , Factor Investing , Factors

Can we identify a COVID-19 factor and quantify companies’ exposure to it? We explored three ways to do so — from very simple to more complex methods.

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Did hedging tail risk pay off? 

Risk Management

Investors taking stock of the coronavirus fallout and recent market volatility have begun exploring tail-risk-hedging strategies as a way to protect against further drawdowns. What are the potential costs and benefits of hedging against tail risk?

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MSCI ESG Indexes during the coronavirus crisis 

ESG Research , Emerging Markets , Global Investing