Research and Insights to Sharpen Your Investment Clarity
In a world of endless data, MSCI Research Roundup delivers what truly matters. Each month, we highlight the most impactful research, expert insights and exclusive, “hot off the press” charts, visuals and other insights to help you navigate markets, uncover opportunities and stay ahead of emerging trends. Stay informed — effortlessly.
MSCI Research: The Month That Was
In February, we covered a broad range of topics, from identifying the traits of persistent outperformers in emerging markets to assessing what’s really behind changes in portfolio emissions and how shifting approaches to energy policy could shape energy markets.?
Long-Term Investing in Emerging Markets. Some emerging-market (EM) stocks have bucked the trend of underperforming headline EM indexes following the 2008 global financial crisis. We used nearly 30 years of index- and stock-level returns to identify their shared fundamental attributes.?
Carbon-Footprint Attribution for Total Portfolio. A portfolio’s carbon footprint can shift for many reasons — such as corporate action, market forces or portfolio rebalancing. Our new unified framework breaks down carbon-footprint attribution across asset classes to help investors pinpoint the key drivers.?
Crude Awakenings: The Shifting Energy Landscape. Oil and gas are in, renewables are out — at least, that’s what the headlines say. But what’s really happening in energy markets? We take a closer look at shifting U.S. policies, investor reactions and how global energy trends might shape the future.?
Which Sustainability Issues Mattered Most? Sustainability data can signal stock-market torpedoes — or long-term winners. Our research reveals the key environmental, social and governance indicators that helped investors avoid sharp drawdowns and capture outperformance.?
Evolution of Fund Naming Calls for Deeper, Data-Driven Sustainability Insights.?With ESMA’s fund-naming guidelines coming into effect in May, sustainability-related fund names are declining while transition-themed funds are growing. Data-driven insights will be key to navigating and understanding underlying sustainability attributes.?
Spotlight on… Tech Stocks in Transition Funds?
As the climate transition accelerates, investors are exploring opportunities beyond companies traditionally involved in renewable energy and industrial decarbonization. Technology stocks are increasingly prominent in transition-labeled investment funds, aligning closely with global equity benchmarks and reflecting their growing role in the low-carbon economy.?
According to our recent study, fund managers include tech stocks in these funds for several reasons:??
For investors, understanding tech stocks’ role in transition funds is crucial for assessing climate-related opportunities. These firms, while not direct decarbonization players, enable the transition and can provide financial stability, balancing the risk-return profile of transition-themed investments.?
Adding Thematic Exposures to a Portfolio? Consider a Firm’s Degree of Diversification.?
Our recent research, leveraging MSCI’s Business Segment Data, showed that, on the one hand, companies with diversified operations across multiple industries tended to exhibit lower valuations, slower earnings growth and weaker quality (lower profitability and higher leverage). On the other hand, they generally demonstrated greater resilience across business cycles than single-industry firms, having lower stock-price volatility and broader geographic-revenue diversification.?
We also found the most-diversified firms had the lowest exposure to most trends in thematic investing — particularly in technology-driven areas such as autonomous technologies, digital economy and next-generation internet — while single-industry firms had the highest exposure to these trends. [1]
Our findings underscore how corporate diversification operates as a key decision-making dimension for global equity investors.?
Multi-industry firms had lower exposure to secular thematic trends??
Hot Off the Press?
Clean-Tech Ambitions Are High — But Are Chipmakers Following Through??
Semiconductors are at the heart of the low-carbon transition and natural-resources conservation — powering alternative energy systems, sustainable computing, smart grids, industrial automation and electric vehicles. The semiconductors industry recognizes the opportunity: 69% of companies emphasize clean-technology innovation as a key business priority.?
While the market acknowledges the opportunities in clean tech, industry-wide action remains limited. Our analysis uncovers a significant gap between intent and action. Just 9% of industry peers have set concrete targets to increase investment in clean-tech innovation. Currently, 10% of industry-wide revenue comes from products and services related to clean tech — still a gap from the ambition many companies have set to make it a core part of their business.?
Closing this gap will require sustained investment, clear targets and accelerated deployment — and companies that do not risk falling behind amid growth opportunities as countries and firms adopt green technologies.?
Big promises, limited action?
US Commercial Property: First Positive Returns in Two Years?
The MSCI U.S. Quarterly Property Index posted a 12-month total return of 0.6% in Q4 2024, marking the first positive annual return in two years. This improvement was driven by consecutive quarterly gains in the third and fourth quarters, reinforcing signs of stabilization in the world’s largest commercial-property market.??
Among major property types, the office market remained the sole laggard, posting an annual total return of -8.0%. However, recent data points to improving momentum, with quarterly losses continuing to moderate. In the fourth quarter, office returns declined just 0.5%, representing this market’s strongest quarterly result since June 2022, when it last posted a positive total return.??
While challenges persist, particularly in the office segment, the latest results indicate that commercial real estate may be entering a phase of recovery, with positive trends emerging across multiple property types.??
Returns for US office property showed improvement in Q4?
[1]?This disparity appears to arise from the inherent sector bias, which we noted earlier, in the diversified category as defined in?our analysis.
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