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Anil Rao

Anil Rao

Executive Director, MSCI Research

Anil Rao leads the Markets and Investment Insights Group at MSCI. He has been with the firm since 2010 in both client-coverage and research roles. He previously worked in sell-side equity research, beginning his career at Arthur Andersen. Anil has an MBA from the University of California at Berkeley and an M.S. from Columbia University. He holds a B.S. from the University of California at Los Angeles and is a CFA® charterholder.

Research and Insights

Articles by Anil Rao

    Investment Trends in Focus: Quarterly Roundtable Q2 2024

    Podcast | Apr 25, 2024 | Luis O’Shea, Laura Nishikawa, Anil Rao, Ashley Lester

    Our panel discusses what’s happening in public equity markets, the importance of governance and of sustainable investing more broadly, as well as the growing world of private assets, including private credit and the ways in which these assets might come to resemble their public counterparts more than they do today.

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

    6 mins read Blog | Apr 2, 2024 | Anil Rao, Dinank Chitkara, Andy Sparks

    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. 

    Beyond the Name Game: Focus on Fundamentals

    5 mins read Blog | Mar 21, 2024 | Anil Rao, Thomas Verbraken

    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.  

    Reimagining Country Investing

    Research Report | Jan 29, 2024 | Rohit Gupta, Anil Rao, Manish Shakdwipee, Hitendra D Varsani

    We introduce an integrated framework to investing in individual country and regional markets, analyzing macroeconomic risks and new growth opportunities as well as the role of sustainable investments in a globally diversified portfolio. 

    Finding Value: Understanding Factor Investing

    Research Report | Nov 1, 2023 | Anil Rao, Raman Subramanian, Abhishek Gupta, Altaf Kassam

    We examine how value investing could be implemented in a passive portfolio, using three generations of value indexes as a starting point for creating investment vehicles: traditional value, value- or fundamentally weighted and high-exposure value.

    Investment Trends in Focus Quarterly Roundtable

    Podcast | Oct 12, 2023 | Thomas Verbraken, Anil Rao, Hitendra D Varsani, Jim Costello

    Our quarterly roundtable examines markets, and market-moving events to help institutional investors as they determine the best way forward; across asset classes and parsing out differences between developed and emerging markets.

    AI’s Moment and Insights from Themes Past

    6 mins read Blog | Aug 9, 2023 | Anil Rao

    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? 

    Exploring Factor Investing in Emerging Markets

    5 mins read Blog | Jun 27, 2023 | Anil Rao

    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.  

    Tech and AI-Driven Firms Spearheaded Thematic Resurgence

    2 mins read Quick Take | Jun 22, 2023 | Anil Rao, Hitendra D Varsani

    Themes such as robotics and AI, internet innovation, autonomous technologies and the digital economy — all featuring companies in the AI supply chain — have emerged as some of this year's top performers. Following a 2022 that was not kind to such firms, we examine this trend. 

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

    6 mins read Blog | May 11, 2023 | Anil Rao, Kumar Neeraj

    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.  

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

    6 mins read Blog | Feb 27, 2023 | Anil Rao

    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.

    No Country for Old Firms? Revisiting Growth and Thematic Investing

    6 mins read Blog | Jan 11, 2023 | Anil Rao, Ketaki Garg

    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.

    Do Birds of a Feather Flock Together?

    2 mins read Quick Take | Nov 8, 2022 | Anil Rao

    Traditionally, stock pickers have used analyses such as comparable metrics to identify opportunities. With this in mind, we used MSCI’s Peer Similarity Scores to identify Twitter-like companies following its acquisition and shift to private-firm status. 

    New Kids on the Bloc: Opportunities in Emerging Markets

    2 mins read Quick Take | Nov 1, 2022 | Anil Rao

    So how can investors approach the challenges ahead for emerging markets? Regional considerations could be insightful.

    Crowd Control for Fund Managers

    5 mins read Blog | Sep 1, 2022 | Anil Rao, George Bonne, Daisy Hu

    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. 

    Abenomics’ Impact on Japanese Firms and Global Investors

    5 mins read Blog | Jul 13, 2022 | Naoya Nishimura, Anil Rao, Moeko Porter

    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.

    Equity Analysts Get Sentiment-al

    2 mins read Quick Take | Jun 30, 2022 | Abhishek Gupta, Anil Rao

    Earnings estimates have fallen for U.S. firms, potentially indicating that recession fears may be influential. We analyze the impact of earnings and ratings as well as areas of the market with the widest range in analyst sentiment.

    Is the Energy Trade Running Out of Energy?

    1 mins read Quick Take | Jun 20, 2022 | Anil Rao, George Bonne

    The energy sector has become the most crowded with investors, largely due to rising valuations and short interest. We evaluate the impact of its shrinking base of companies as well as the potential implications for net-zero-aware investors. 

    Seven Lean Years and Other Lessons from the Last Tech-Stock Correction

    2 mins read Quick Take | May 23, 2022 | Raman Aylur Subramanian, Anil Rao, Hitendra D Varsani

    While the share of U.S. technology firms with a substantial drawdown has risen fast, it is not yet at the level of the early-2000s technology crash. It is, nonetheless, worth examining what lessons we might pull from the wreckage of that time.

    Stock Crowding Shifts… Again

    1 mins read Quick Take | May 12, 2022 | Peter Zangari

    The U.S. stock market has plunged 15% to start the year, while growth stocks have fallen even farther. Many firms are suffering through historic drawdowns and a resetting of their valuations.

    Quality in Times of Crisis

    5 mins read Blog | Mar 17, 2022 | Anil Rao

    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.

    Which Companies Lost Most in Europe’s Lost Decade?

    5 mins read Blog | Dec 14, 2021 | Anil Rao, Jean-Maurice Ladure

    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?

    Did Home Bias Help?

    2 mins read Quick Take | Oct 27, 2021 | Anil Rao, Ana Harris

    Through time, many investors have shown a preference for their home markets. 

    The Pressure of the Crowd: Stress Testing Thematic Indexes

    6 mins read Blog | May 17, 2021 | Anil Rao, Thomas Verbraken

    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.

    Innovation Remix: Adding Thematics to Equity Programs

    6 mins read Blog | Apr 14, 2021 | Raman Aylur Subramanian, Anil Rao, Subramanian Aylur

    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.

    The Pace of Fast Change: Growth vs. Thematic Investing

    6 mins read Blog | Mar 16, 2021 | Anil Rao, Stuart Doole

    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?

    Better Together: Policy Benchmarks, Active Equity and ESG

    Research Report | Jan 25, 2021 | Anil Rao, Zoltán Nagy, Guido Giese, Raman Subramanian

    As we’ve previously demonstrated, incorporating firm-level ESG characteristics into portfolio construction can preserve, and even improve, risk and return relative to the broad market. Here we follow-up by asking how an allocator can integrate ESG considerations efficiently across multiple portfolios in its equity program.

    For target-date funds, hindsight was 40/60

    Blog | Apr 9, 2020 | Anil Rao

    Recent market volatility has been especially unkind to those closest to and early in retirement, as the sequence of returns matters for retirement income. Would low-volatility and ESG investments have benefited target date funds during volatile periods?

    Value investing is down. But is it out?

    Blog | Oct 23, 2019 | Abhishek Gupta, Anil Rao

    Value stocks generally underperformed the broad U.S. equity market over the past decade — just as they did in the late 1990s. What drove that underperformance? Was it consistent globally? Within U.S. sectors?

    Retire in Monte Carlo? Simulating retirement outcomes

    Blog | Oct 11, 2019 | Anil Rao

    Despite global equity performance, U.S. DC plan participants may be ill prepared to meet retirement-spending needs. We assessed four equity-allocation scenarios — including an equity multifactor allocation  and integration of ESG views —  to see which performed best.

    Same target, different destinations

    Blog | Jul 31, 2019 | Anil Rao

    Target-date funds (TDFs) have gained wide adoption in U.S. defined-contribution plans over the last decade, aided by the proliferation of auto-enrollment features and the funds’ presentation as a “set it and forget it” approach.

    Game of Homes: Is winter coming for the domestic-equity bias?

    Blog | Apr 30, 2019 | Raman Aylur Subramanian, Anil Rao, Raman Subramanian

    Can we quantify home-bias risk in an allocation? And, what has happened when U.S. stocks ended previous multiyear runs of outperformance?

    Watching Beta in Volatile Equity Markets

    Blog | Mar 12, 2019 | Anil Rao

    The U.S. equity market ended last year with a historic drawdown, and beta stood out as a driver of the market decline. But what happened when those losses starting reversing in early 2019?

    Evaluating Emerging-Market Stocks through a Governance Lens

    Blog | Feb 21, 2019 | Raina Oberoi, Anil Rao

    Emerging-market stocks generally are perceived to have lower governance standards than their developed-market counterparts. Less transparency is one factor behind this view. Some emerging-market companies may also disadvantage minority shareholders. How can active and index-based investors address these issues?

    Beaten-Down Beta

    Blog | Jan 3, 2019 | Anil Rao, Roman Kouzmenko

    U.S. and international equity markets fell sharply to close out 2018. The MSCI USA Index fell 15% in the fourth quarter alone. (It fell a total of 6% for the year.) As we previously examined, investors began rotating from cyclical sectors and factors to defensive ones in June. This pattern continued, in earnest, until October.

    Sector investing in China

    6 mins read Blog | Nov 14, 2018 | Anil Rao

    As the China A shares market has evolved, investors have faced new choices. They can continue with broad allocations to the emerging markets (EM), choose slightly narrower allocations to China and other specific EM countries or consider targeted investments within China through a variety of means.

    Weighty Matters: Going Beyond Stock-Picking

    Blog | Aug 30, 2018 | Anil Rao

    Fundamental equity managers have traditionally looked for an edge using various strategies and approaches. Here we examine whether it historically has been possible to manage a fund’s risk exposures without disturbing the underlying investment process.

    Can investors win a U.S.-China trade war?

    Blog | Jul 3, 2018 | Anil Rao

    With new tariffs in effect as of July 6, we investigate our earlier assertion that “while an expanded trade war could lead to a ‘lose-lose’ outcome, there could be greater impact for stocks in the U.S. Overall, they are more exposed to the Chinese economy than the other way around.”

    International small caps are alive and kicking

    4 mins read Blog | Jun 11, 2018 | Anil Rao

    Investors eager to write the obituary of the size premium might want to put down their pens. Small-cap stocks in developed markets outside the U.S. have been on a decade-long run of outpacing their large- and mid-cap counterparts.

    Understanding Factor Exposures When Markets Become Volatile

    Blog | Feb 9, 2018 | Anil Rao

    How did different equity factors fare during the past week’s market turmoil? When markets are gyrating, it can be difficult to figure out just what is happening. Real-time data provides greater insight into market events as they unfold.

    Diverging emerging markets: global equity markets in 2017

    Blog | Jan 12, 2018 | Anil Rao

    The emerging markets rally, the U.S. dollar’s depreciation and the resurgence of global growth were the top three drivers behind a double-digit rally in global equities last year. Stocks were led by the MSCI Emerging Markets Index’s 38% return. Developed markets, as represented by the MSCI World Index, returned 23% last year. As we enter 2018, investors will monitor whether these themes continue into the New Year.

    Using factors in international investing

    Blog | Nov 8, 2017 | Anil Rao

    Over the last decade, asset owners have implemented factor investment programs with a focus on domestic markets. Increasingly, they are also funding equity factor programs in international markets. Two catalysts are driving this trend. First, there has been a steady erosion in asset owners’ home biases, leading to more indexed and active international mandates. Second, investment committees and boards of trustees have become more comfortable with using factors as a complement to core indexed...

    Fast-moving Markets: Revisiting the August 2007 Quant Crunch in Real Time

    Blog | Aug 2, 2017 | Anil Rao

    When markets get volatile, stock prices can move very quickly in a short period. As we saw in the August 2007 “quant liquidity crunch”— now about to mark its 10-year anniversary — many quantitative equity managers could have benefitted from getting market insights in real time as they found themselves in crowded trades.

    Bridging the gap: Adding factors to indexed and active allocations

    Research Report | May 2, 2017 | Dimitris Melas, Anil Rao, Subramanian Aylur

    Asset owners face a challenge in determining how the factor allocation fits into the overall equity program, in particular how the factor allocation relates to the existing roster of active managers. This paper uses a risk budgeting framework to investigate how active mandates and factor allocations can be combined. We address three key questions: 1) how does the level of active risk in active management affect the factor allocation decision, 2) what share of the portfolio can be deployed to...

    Bridging the gap: Adding factors to indexed and active allocations

    Blog | May 2, 2017 | Anil Rao

    How can asset owners integrate an equity factor allocation into their existing roster of active managers? There is no one answer that suits all. The response may be different for each asset owner, depending on its investment beliefs, goals and risk tolerance.

    Understanding Factor Investing

    Research Report | Mar 30, 2016 | Raina Oberoi, Anil Rao, Subramanian Aylur, Lokesh Mrig

    The size premium has been widely used in asset allocation and in risk models for decades. However, some academics and practitioners have contested the validity of the size premium. They argue: 1) the size premium has disappeared in the last 20 years and no longer exists; 2) the size premium exists only in the United States and not in other markets; 3) the size premium disappears after filtering out smaller stocks for investability. In this paper, we refute these claims and examine ways of...

    Research Spotlight - Finding Value: Understanding Factor Investing

    Research Report | Jul 9, 2015 | Abhishek Gupta, Altaf Kassam, Anil Rao, Subramanian Aylur

    The perennial appeal of value investing is based on the excellent long-term performance of global value stocks. Investors today use various approaches to identify and compare the exposure of stocks with "value" characteristics that help explain risk and return. In this Research Spotlight, we create a common definition of “value” and examine how value strategies can be implemented, in both active and passive portfolios, using three generations of value indexes as examples.

    Finding Value: Understanding Factor Investing

    Research Report | Jul 9, 2015 | Abhishek Gupta, Altaf Kassam, Anil Rao, Subramanian Aylur

    The perennial appeal of value investing is based on the excellent long-term performance of global value stocks. Investors today use various approaches to identify the exposure of stocks with “value” characteristics that help explain risk and return.  In this Research Insight, we create a common definition of “value” and examine how value strategies can be implemented, in both active and passive portfolios, using three generations of value indexes as examples.

    "Factoring" in the Emerging Markets Premium - November 2014

    Research Report | Nov 5, 2014 | Raina Oberoi, Anil Rao, Subramanian Aylur, Philippe Durand

    Factor investing has become increasingly popular in developed markets. In this paper, we show that they have worked in emerging markets as well. All six MSCI Emerging Markets Factor Indexes outperformed the parent index over a 15-year plus period, based on simulations. Investors seeking premia in addition to broad EM beta can explore factor index investing via this index series. Active EM managers can also benefit from these tools. Traditionally, they have mainly harvested EM beta, along with...

    Research Insight - Manager Risk Contribution: Attributing Risk in a Multi-Manager Portfolio

    Research Report | Mar 4, 2014 | Anil Rao, Whit Miller

    MSCI extends the analysis of a previous paper, Benchmark Misfit Risk: Identifying the Risk Contribution Arising from Differences in Manager and Policy Benchmarks, where we introduced the misfit effect on a Global Equity portfolio. In this latest paper, the same Global Equity portfolio is formed from the combination of five managers across three regions. We form an expression for Manager Risk Contribution in terms of the selection effect and misfit effect. We use this expression to calculate...

    Benchmark Misfit Risk: Identifying the Risk Contribution Arising from Differences in Manager and Policy Benchmarks

    Research Report | Jul 9, 2013 | Anil Rao, Jose Menchero, Whit Miller

    The benchmark misfit effect arises when the policy benchmark and the manager benchmark are not aligned. Unless this effect is specifically modeled, it is not possible to determine how the active risk of an individual manager contributes to the risk of the overall fund. In this Research Insight, we showed how the classic Brinson model could be extended to account for benchmark misfit. We also demonstrated how to properly attribute overall portfolio risk to the active risk from an individual...