China A-Shares are too big to be ignored but remain difficult for many institutional investors to access. How can global investors avoid a stock market that is now the world’s third-largest, with a total market value of nearly USD 4 trillion, putting it just behind the United States and Japan?

Many institutional investors take the view that their reference universe should include large-, mid- and small-cap equities and that smaller companies can earn a risk premium over larger ones.

We’ve observed that many institutional investors have abandoned their historical domestic-equity bias and now view global equities as a single, broad asset class.

As companies expand their footprint globally, the geographic distribution of their revenues evolves over time and their economic exposures may diverge from their country of domicile and primary listing.

Investors who aim to understand what drives returns over the long run might look to the Land of the Midnight Sun.

Maintaining a “home bias” in the equity portfolio may come with huge opportunity costs.

In a 2012 study MSCI prepared for Norway’s Ministry of Finance, we examined:

Investors have long debated the benefits of active versus passive investing. There are institutional investors with strong convictions in each camp, but many have become increasingly pragmatic, combining  active and passive mandates in pursuit of the best risk-adjusted return.