Ashley Lester returns with his roundtable of experts from across MSCI Research and Development to examine the markets with a 360° perspective. The theme of the year is U.S. dominance. What will investors be watching as they seek to steady an unbalanced world?

Tradable-bond indexes consist of the most liquid subset of corporate bonds. Maintaining sector and credit-bucket allocations consistent with the underlying benchmark, these indexes may help investors track the market while positioning in more-liquid securities.

With fixed-income investors still recovering from a year that arguably saw nearly every cycle of the market, we look ahead to 2025 across sectors, including sustainability-linked bonds, securitized products and the ongoing effects of inflation and moves by central banks.

From the effects of China’s stimulus to the power of sustainability on portfolio performance and companies cost of capital, our panel dissects the latest market drivers and where investors may be focused for the rest of 2024.

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.  

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. 

We consider a scenario in which corporate-bond issuers meet their projected levels of emissions reductions — and what it could mean for the fixed-income portfolios of investors with a climate mandate. 

With stubborn inflation, a plunging Japanese yen and unpredictable elections around the globe, 2024 has proven challenging for fixed-income investors — and for central banks. We sat down with MSCI’s global head of fixed-income solutions research, Afsaneh Mastouri, to talk about the state of fixed-income markets, and what the rest of the year may hold.

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. 

Sovereign bonds from emerging markets constitute a substantial proportion of the global asset universe. We look at the MSCI Emerging Markets Sovereign Bond Index to assess issuance trends, credit quality and other characteristics of index constituents. 

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? 

Ashley Lester and team help investors find the connections between — and evaluate the risks and potential opportunities of — AI, geopolitics and the effects of climate change, as well as the growing importance of private capital and continued influence of monetary policy.

We look deep into these indexes to determine what’s led to their showing characteristics, such as duration, spread and yield, similar to those of the parent index, as well as similar risk-adjusted performance.

A bond portfolio generates cash flows over time that include coupon payments and the face value of matured bonds, assuming no defaults. With controlled and systematic reinvestment of this cash flow, investors can gradually decarbonize their portfolios on a glidepath.

We offer a comprehensive guide for investors to illustrate how a complex set of financial and climate targets and climate investment objectives can be simultaneously integrated into the construction of indexes as well as portfolios.

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

In this paper, we highlight to investors and portfolio managers the significance of climate-change risk for the value of corporate bonds, as well as provide a framework for further research in this area.

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

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?

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.

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.