MSCI, a provider of international equity, US equity, fixed income and hedge fund indices, has launched a new multiple-asset class index.
The MSCI Global Capital Markets Index combines, on a market capitalization weighted basis, the components of the MSCI All Country World Equity Index and the MSCI Global Total Bond Index, providing an objective representation of the global capital markets for research, communication and benchmarking.
Designed to help both professional and high net worth investors, among others, the MSCI Global Capital Markets Index enables a more comprehensive, objective and easy comparison of individual portfolios versus the investable global opportunity set. The index provides a better understanding of the risk/return characteristics and diversification benefits of different asset classes and thus serves the investor's asset allocation process. Importantly, this index also helps articulate the added value provided by a strategic policy benchmark or other forms of asset allocation decisions.
The index currently covers over 11,000 securities with a total capitalization of more than USD 40 trillion. It is the first multiple-asset class index calculated by a major index provider, utilising its own proprietary indices and applying a consistent construction methodology across equities and bonds. Previously, investors had to combine different indices, from different providers, with different index methodologies to try to approximate this universe.
"Until now there has been no objective and consistent framework for depicting and measuring the diversification offered by global markets to investors allocating across the core asset classes," said Khalid Ghayur, global head of benchmark research at MSCI Barra. "Global capital markets continue to be volatile and investors increasingly hold well-diversified portfolios, across asset classes and geographies. The MSCI Global Capital Markets Index provides an objective representation of the core financial investment opportunities available to all investors, regardless of their domicile."
The MSCI Global Capital Markets Index is now being distributed to over 500 client organizations across the world, including asset managers, broker dealers, asset owners and private banks, as part of the MSCI MAC Basic Index and MAC Enhanced Index products. It is also available via leading vendors.
Background notes: The MSCI Global Capital Markets Index combines only liquid and marketable asset classes that offer transparent pricing and objective supply information. It combines, on a market capitalization weighted basis, the components of the MSCI All Country World Equity Index and the MSCI Global Total Bond Index, which are constructed from methodologies that apply, among other things, minimum liquidity and size requirements, and adjustments for free-float, strategic holdings and practical investment hurdles.
The MSCI Global Capital Markets Index can be broken down into sub-indices by currency block and is calculated daily with returns available in seven currencies. Its inception date is 31 December 1993.