Our analysis suggests that incorporating ESG and sustainability considerations into Islamic finance not only aligns with the ethical mandates of Sharia law but also has the potential to improve financial outcomes. 

The small-size premium has declined over the last five years, with market dynamics, deglobalization and inflationary pressures playing contributing roles — a trend that has continued into 2024. We analyze the small-cap space across regions. 

A patent cliff in blockbuster drugs threatens many biotech companies but has also spurred new R&D into drugs and innovative treatments. The MSCI Biotech Advance Indexes are designed to reflect the performance of companies leading this innovation. 

The MSCI Resilient Future Indexes capture eight environmental-opportunity subthemes to help investors broadly identify business activities with the potential to make positive contributions toward achieving a resilient future. 

The emissions intensity of the sectors that compose the small- and large-cap universes differs, helping to explain why small caps’ emissions intensity has exceeded that of their larger-cap peers. 

Post-election U.K. market surprises seem unlikely, but both major political parties’ manifestos are placing AI and energy in the spotlight. 

Since inclusion in the MSCI Emerging Markets Index in 2019, the Saudi equity market has evolved, offering an expanded and more diversified opportunity set. Vision 2030 has the potential to build on this progress, but risks and challenges remain.

Small-cap firms that adopt science-based targets and increase green revenues could be viewed as turning the lemons of high emissions into the lemonade of low-carbon transition, broadening the opportunity set for investors supporting decarbonization.   

In response to deglobalization, multinational corporations are making changes to their logistics networks. Using MSCI Economic Exposure data, we examine how small-cap stocks around the world may be impacted. 

Certain industries are more susceptible to the effects of deglobalization. We explore how investors can identify potential beneficiaries of global supply-chain realignment considering industry, thematic and structural characteristics.

Across regions — U.S., international and emerging markets — small-cap stocks have displayed higher cross-sectional volatility than other market-cap segments. Small caps’ wide dispersion indicates potentially fruitful stock-selection opportunities.

We explore the methodologies behind the MSCI ESG Indexes to see how they integrate ESG considerations. We also assess the differences of these approaches in terms of the financial and ESG characteristics to understand potential trade-offs. 

Two measures of concentration risk indicate historically low levels for small-cap stocks in contrast to the higher levels of their large-cap counterparts.

Inflation appears to have peaked at the end of 2022, but it remains influential in capital markets. We analyzed nearly 50 years of data to assess how small caps’ performance has changed with shifts in both the level and trend of inflation.  

Some investors are already evaluating opportunities offered by a post-slowdown world. One of these opportunities is small-cap stocks, which have historically outperformed large caps, especially after recessions.  

Could investors participate in China’s reopening other than by directly investing in China shares? We looked at 14 European equity markets and compared their economic exposure to the Chinese economy.

Value rebounded in 2021, after more than a decade of lackluster performance. No matter what the expectation going forward, there are useful lessons to be learned from value strategies’ behavior over the past two decades.

There were several dynamics that influenced the performance of ESG indexes in 2022. We examine the impact of macroeconomic and financial conditions on returns in the short- and long-term.

There have been several dynamics that influenced climate-index performance in 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors, as well as the management of low-carbon transition risks.

Broad market-cap weighted indexes might not fully assess climate-objective alignment. We believe that an appropriate parallel benchmark could help illustrate this alignment, improve transparency and allow investors to make more informed decisions.

While much of the market volatility endured, the MSCI ESG Indexes’ performance drivers varied from the first half to the third quarter of 2022. We examine the impact of macroeconomic and financial conditions on returns in the short- and long-term.

Innovation investing has gained momentum over the past few years. Our research focuses on systematically investing in companies that seek to capitalize on opportunities created by megatrends and innovation-driven themes.  

There have been several dynamics that have influenced climate-index performance in the third quarter and first nine months of 2022. We examine the impact of macroeconomic and financial conditions on risk, return and sectors. 

There have been specific dynamics that have influenced ESG-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on return in the short- and long-term. 

There have been several dynamics that have influenced climate-index performance in the first half of 2022. We examine the impact of macroeconomic and financial conditions on risk, return, sectors and factors.

Post-COP26, the need to reach net-zero is more compelling than ever. How can investors approach a net-zero pathway in their equities portfolio? We explore three portfolio-construction approaches that target reductions in carbon emissions over time.

Sustainable investing is on the rise around the world. We review four case studies involving global equities as a way to explore how investors could have used sustainable derivatives when managing ESG and climate-transition risk exposures.

In the second post in our series, we further probe value’s underperformance over the past decade and ask if the historic definition of value remains relevant. We specifically look at whether a company’s valuation can be enhanced by reflecting R&D investments. 

Despite a decade or so of disappointing performance, value’s recent uptick merits examination into what drove its performance historically, and if conditions have changed or if the factor needs to be redefined. We look at near- and long-term performance with Hitendra Varsani, Executive Director, Global Solutions Research, and Saurabh Katiyar, Executive Director, MSCI Research.

Despite a recent performance lift, many still ask whether the value factor is broken. We analyze the reasons behind its underperformance and start exploring the potential of updates to value definitions and approaches to value-portfolio construction.

Kuwait’s reclassification from frontier to emerging market and inclusion in the MSCI Emerging Markets Index provides investors exposure to yet another Gulf Cooperation Council member, one that has worked to open its doors to foreign investors.

Institutional investors have typically used traded volume as a way to assess market liquidity. Adding alternative measures that gauge market impact and trading costs can provide a more comprehensive view for portfolio managers and traders.

Building on previous MSCI research into the nuanced performance of the value factor, including the impact of sectors and other style factors, we look at how exposure to value drove the performance of actively managed value funds.

Saudi Aramco’s IPO showed why single-country index providers may sometimes need to include companies (especially larger ones) outside of scheduled reviews, as they work to bridge gaps between a country’s equity index exposure and economic drivers.

During low interest-rate, high-volatility environments, some investors have turned to high dividend-paying stocks. However, overly simplistic approaches to selecting dividend-paying securities exposed investors to potential “yield traps.” Could these traps have been avoided?

Foreign interest has risen in Saudi Arabia following the easing of foreign-ownership limits. Our analysis shows investors would have benefited by controlling for exposure to small-cap companies.

Saudi Arabian stocks will be included in the MSCI Emerging Markets Index and the MSCI ACWI Index in a two-step process starting in June this year. With the first step of inclusion of the MSCI Saudi Arabian Index coming shortly, we ask how inclusion of this Middle Eastern market would have affected the MSCI EM Indexes.

The U.S. bull market is now the longest in history, leading the way for strong global equity returns over the 10 years since the financial crisis. What does this mean for valuations? We found that while they are high, they have not reached extreme levels. What’s more, there are distinct valuation characteristics across regions, sectors and factors that may create potential investment opportunities.

In the past, institutional investors largely ignored currency hedging in their international equity portfolios. With the globalization of the equity portfolio and recent market volatility, they no longer can afford to do so. However, how to hedge foreign-exchange exposure is receiving renewed scrutiny. Static hedges have delivered higher risk-adjusted returns compared with unhedged portfolios over a long-term horizon. The static hedge, however, faces challenges in adapting to changing market...

Global equity portfolios expose investors to currency risk. Those wishing to minimize currency effects often hedge that currency exposure without touching their underlying international equity portfolios. However, currency fluctuations may also increase the investment returns and those movements can be sharp. We describe how the MSCI Adaptive Hedge Indexes use versions of four well-known currency indicators – Value, Momentum, Carry, and Volatility – to systematically determine a level of...

Ever since central banks slashed interest rates in response to the Global Financial Crisis, many institutional and retail investors turned to high dividend-paying equities to meet their needs for income. However, a naïve high-yielding equity strategy can expose itself to various “yield traps,” such as those stemming from temporarily high earnings, high payouts or low stock price. We find that the yield factor has tended to perform well during a structurally low and rising interest rate...