A new series of US equity indices is under development by MSCI. The first of the new benchmarks, which are geared towards US domestic investors, will be introduced early next year, the index provider says.
“MSCI is developing this product in response to significant client demand for a US equity index series that features the disciplined approach to index methodology, data integrity and level of service that MSCI brings to international equity investors,” says Henry Fernandez, president and CEO of MSCI.
The new series will include large, mid and small cap indices, which aggregate into an investable market index. As well as this, a ‘micro cap’ index will be created, which, when combined with the investable market index, will form a total market index, says MSCI.
The benchmarks will also define value and growth styles, it said, using a new multi-factor approach. And within the series, sector indices will be calculated based on the Global Industry Classification Standard (GICS).
The new US indices, says MSCI, have features, which address concerns investors have about existing US domestic benchmarks. Improvements include a thorough and transparent index construction and maintenance methodology and eight different variables used to reflect value and growth styles more accurately.
The indices will also have ‘buffer zones’ to reduce index turnover caused by the temporary migration of securities from one size or style sub index to another.
Ferndandez says consultations with investors had indicated that the US equity series would be welcomed by asset owners, consultants and asset managers as a valuable tool for asset allocation and portfolio performance measurement.