Your Portfolio's Carbon Footprint May Be Smaller Than You Think
In recent years, many institutional investors have committed to measure and lower exposure to carbon emissions in their portfolios. But that presents a challenge: how to estimate such exposure, given the lack of disclosure by most companies about their carbon emissions?
What the Rise in Populism May Mean for Your Portfolio
Brexit highlights fissures between perceived winners and losers from globalized markets and underscores for investors the importance of factoring the consequences of inequality and popular discontent into their views. MSCI's latest quarterly report examines the potential impact on institutional portfolios of a tide of populist sentiment across Europe and the U.S.
The Shrinking Cost of Carry in Currency Hedging
The cost of hedging exposure to foreign currencies is coming down for some investors. That's the takeaway from Chin Ping Chia, MSCI's head of research for Asia Pacific, who explains in his latest post that hedging can help investors avoid losing money amid swings in the foreign-exchange market but can be an expensive strategy for investors based in countries with structurally low interest rates.
The Crisis of Affordability in Real Estate
Two-thirds of the world’s population is expected to live in cities by 2050, up from 54% in 2014, according to the United Nations. Yet, as of the end of 2015, we found that housing for people in the middle of the income pyramid is unaffordable in most cities and countries that we studied. We estimated that the potential affordable housing market catering to this population segment is significant: $502 billion annually by 2020, an increase of 7.3% from 2015. This market is fueled by high potential monthly rents (greater than $ 1,000 in the main markets) and by creditworthy households.
The Irresistible Rise of REITs
Real estate is slated for classification as a stand-alone sector at the end of August, a change that recognizes its distinct characteristics and prominence in the global economy. Over the past 15 years, real estate investment trusts (REITs) have increased their share of equity investment worldwide. “Institutional investors may consider combining direct real estate in their home markets with an allocation to global REITs as a way to help accelerate diversification of their real estate portfolios,” writes Sebastien Lieblich, global head of real estate research, who in his latest post discusses developments that are enhancing the sector's viability.
What Matters Most for Investors in the Long Run
Investors who aim to understand what drives returns over the long run might look to the Land of the Midnight Sun.
Should You Hedge Your Foreign Currency Exposure?
The volatility of currency has ticked up in recent years as a combination of monetary policy and currency wars fuel swings in the foreign exchange market. That leaves managers of global equity portfolios with a dilemma: disregard the volatility and leave their exposure to foreign currency unhedged, or apply fully hedged strategies that can prove costly over time.
Thinking Broadly About Emerging Markets
The recent uptick in emerging market equities has left investors to wonder whether the gains might continue and to think anew about how to approach the segment. An emerging markets composite index has tended over time to capture diversified returns across multiple countries without adding additional risk, Raman Aylur Subramanian, MSCI's head of equity applied research, explains in his latest post.