The global-market portfolio represents the aggregate financial assets of all investors worldwide. Institutions can benefit by monitoring its composition and evolution, to shed light on investor preferences, as well as trends in asset-class weights.[1]
In this blog post, we examine the MSCI estimate of the size of the global-market portfolio, as of the end of 2023, the changes for each asset class and their corresponding regional and sectoral composition.[2] Over the past year, the global-market portfolio has grown, with all constituent asset classes experiencing an increase in total market value driven by gains in market value, currency movements and asset creation. The year-on-year 11% growth by the end of 2023 is well above the 5.7% annualized average growth rate seen over the last decade. Similar to the previous two decades, the largest asset classes in the global-market portfolio are fixed income (USD 116 trillion) and public equity (USD 77 trillion).[3]
Estimating the size of the global-market portfolio
MSCI’s estimate of the global-market portfolio encompasses investment opportunities such as public stocks and bonds and private assets. The full global-market portfolio had an estimated market value of USD 271 trillion, as of the end of 2023, up from USD 248 trillion the year prior (see exhibit below). Meanwhile, the investable global market — excluding investments that are not easily accessible to institutional investors[4] — was valued at USD 213 trillion as of December 2023, up from USD 192 trillion. As noted, fixed income remained the dominant asset class, as it has been for the past decade, comprising over half of the global-market portfolio with a valuation of USD 116 trillion, representing 54% of the total at the end of 2023. Public equities accounted for a third of the global market, at USD 77 trillion, and played a significant role in the global-market portfolio's expansion over 2023.
Where asset-class composition stands
The investable global market may have expanded by USD 91 trillion, or a 5.7% geometric average, on an annual basis in the past decade, but growth has not been steady. Based on MSCI estimates, the biggest expansion happened in 2020, with a 17.4% increase, and the steepest decline occurred in 2022, with a 7.7% decrease, as shown in the exhibit below.
Evolution of the investable global-market portfolio
In 2023, the market value of all asset classes increased (see the second panel of the exhibit below). Public equity, the second-largest asset class, contributed most to USD-value growth, adding USD 12 trillion in 2023. This asset class also saw the largest increase in its weight during this period, growing by 2.4 percentage points (panel 1 in the exhibit below), while fixed income and real estate’s share decreased year on year. The relative increase in the market valuation of unlisted infrastructure was primarily driven by capital calls rather than performance improvements (see panel 3 in the exhibit below).
Year-on-year change in the global-market portfolio
Regional composition
As of the end of 2023, the U.S. remained the dominant region in the global-market portfolio (see the exhibit below). It was the largest region in public-equity markets, with a free-float-adjusted market capitalization of USD 44.6 trillion, and in fixed-income markets, with USD 44.7 trillion debt outstanding, and also maintained its leadership in the private-equity market, with USD 2.3 trillion in net asset value.
Regional composition of the investable global market (%)
Sector shifts through the years
We also compared the sector composition of global public- and private-equity markets (see the exhibit below).[5] At the end of 2023, information technology was the dominant sector in both asset classes, reflecting the rise of tech companies and the digital transformation across industries.
Sector composition of private-equity funds relative to public markets
Private equity has been more concentrated in the information-technology sector, however, with a 30% share compared to 22% in public equities, but the weights converged a little in 2023 (as shown in the exhibit below). Conversely, financial companies remain more prominent in public markets, at 17%, although the public-equity financial sector’s weight has been declining in recent years, reflecting the evolving financial landscape, driven by the rise of financial technology, alongside shifts in regulatory policies and the de-rating of listed companies due to weaker returns on capital.
Evolution of select sector weights in private-equity funds and public markets
The global-market portfolio and market change
Studying the evolution of the global-market portfolio has provided insights into market sentiment, issuance trends and shifts in regional and asset-class dynamics. In 2023, the prominence of the U.S. market and the rise of the information-technology sector in equities underscored key trends that were shaping the investment landscape.