The MSCI Similarity Score represents a significant evolution in wealth-management practice, aiding firms in balancing individual client needs with scalable processes and shifting perspective from a holdings-based analysis to behavioral similarity. 

The concept of tax alpha can help a wealth manager explain a client’s after-tax performance. In a new article in the Journal of Wealth Management, we propose two frameworks for the after-tax calculation used to measure tax alpha. 

For wealth managers and financial advisers seeking customized solutions to meet growing client demand, rules-based management approaches for model portfolios may offer opportunities to improve on traditional management approaches.    

Our panel of experts, led by chief research officer, Ashley Lester, takes stock of global markets as we enter the back half of 2024. Ashley and team examine the short- and long-term issues affecting investors, including the ever changing geopolitical landscape, the continued impact of AI and the role of private markets in the carbon transition.

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.

Householding applies one target asset allocation across all family assets and manages them holistically for the highest practicable after-tax return. We compare the outcomes of two use cases for householding vs. a single-portfolio approach. 

Listen in on an in-depth discussion about the growing demand for and personalized tax-efficient strategies from wealth-management clients — driven by technological revolution and the coming, intergenerational transfer of wealth.

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.

We analyze a framework for wealth managers considering the impact of managing their clients’ investment preferences alongside different tax-management approaches. 

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.

The Russian invasion of Ukraine is another reminder that geopolitics play an outsized role in determining economic relations between countries.

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. 

What’s behind the growth of ETFs that combine factors and ESG? Some feel it’s a natural partnership, an inevitable evolution, while others have questions about the explanatory power of ESG and the effects of integrating it into portfolios. We explore the topic with MSCI’s Raina Oberoi and Anthony Kruger of iShares.

Despite the potential benefits of investing in small-cap stocks, investors often worry about liquidity, ease and ability to trade, at the lower end of the market-cap spectrum; specifically, costs and access.

A few weeks ago, we looked at the historical and current concentration of a range of regional indexes and noted there had been an increase in concentration across the globe. 

The volume of world merchandise trade fell by 5.3% in 2020, while travel services were down by 63%, according to estimates by the World Trade Organization (WTO). Nonetheless, the WTO expects recovery from the pandemic’s effects to be swift, with regional differences, and world merchandise trade volume to increase by 8.0% in 2021. But even before the pandemic, global trade had shown signs of slowing, and the growth trend appeared to be flattening. There were several reasons, from increased...

When investors are considering adding new types of investments to their portfolios, they examine not only the risk and return profiles of those new allocations, but also whether they might add diversification benefits.

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.

We recently looked at small caps through the lens of historical performance during economic recovery. 

As the world economy starts to feel the benefits of COVID-19 vaccines, some investors have started to revisit the role of small-cap stocks in their portfolios. 

Whether investors include a tactical approach or invest strategically for the long term, diversifying across factors, sectors and geographies has historically played an important role in portfolio construction. 

Raina Oberoi, head of index solutions research for the Americas, takes inspiration from the resilience of her fellow New Yorkers as they deal with being the U.S. epicenter of the COVID-19 crisis, and compares it to the resilience her research has found in some expected — and unexpected — areas of the market. Has there been a shift in how investors analyze and manage portfolios?

One challenge facing investors is how to quantify the impact ESG has had on their investment process. We analyzed top ESG funds to better understand the contribution of the ESG factor to their performance.

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?

As interest rates in the U.S. started increasing in late 2015, many investors expressed concerns over the impact that rising rates could have on their investments. However, the tone of the U.S. Federal Reserve (the Fed) shifted from “we’re a long way from neutral” in October last year to a more accommodative stance of “we will be patient” early this year, re-emphasizing that expression at the January 2019 Federal Open Market Committee meeting.

Despite institutional investors, globally, continuing to allocate funds to indexed strategies, active management remains attractive across various products and geographies. The ability to select skilled managers in opportune markets who can add value beyond a indexed investment tracking an index, may justify the case for active implementation. We analyze different segments of the equity markets to find the intersection of those that have provided the greatest opportunity and where managers...

A lot has been written about the persistence of the global small-cap premium. But what, apart from size, distinguishes small-cap stocks from their large- and mid-cap counterparts, and how can these distinctions help institutional investors?

In recent years, pension funds around the world increasingly have shed their home bias and made global small-cap allocations.

Institutional investors worldwide traditionally have tended to focus on the stocks of larger companies, finding them less risky, more liquid and offering greater investment capacity than small-cap stocks. But asset owners and managers increasingly are allocating strategically to the small-cap equity segment as part of their global equity portfolios i.e., via an “all-cap” approach.

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...

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...