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Commercial real estate represents an important element of the asset allocation process, but is difficult to access directly. There are high barriers to entry and exit. In times of financial stress, it can be very difficult to liquidate holdings. Listed (or publicly held) real estate is far more liquid, but also comes with its own set of problems. These securities are much more volatile, especially over shorter time frames, and incorporate an additional layer of corporate leverage. Indexes tracking direct and listed real estate differ significantly in their calculation methodologies, making direct comparisons difficult. We have attempted to capture the best of the two worlds: an investable index with a risk and return profile of direct (private) real estate, providing a more accurate measure of the asset class’s performance and the liquidity of listed (public) real estate, providing timelier valuations, greater transparency, and greater investability. We achieved this construction by lowering the volatility and deleveraging a listed real estate index. This approach may appeal to both smaller asset owners who are not large enough to build a diversified direct real estate portfolio and to larger investors as a liquid way to quickly build or reduce exposure to this asset class.

With the growth of international investing, the impact of currency movements continues to be a significant issue. All investors are exposed to currency risk when investing abroad and adverse moves in exchange rates can dramatically impact their performance. Hedging currency exposure is one technique for taking currency risk out of the equation when investing in foreign companies. The MSCI Hedged Indices provide one way to measure the performance of a currency hedged equities. Here we explore the effects of currency on foreign investments and how currency hedging can help investors who do not have a viewpoint on the direction of exchange rates.

MSCI Value Weighted Indices are systematic indices that aim to reflect the value premium by employing an alternative weighting scheme that tilts the index towards stocks with lower valuation ratios. In this paper, we review the theoretical aspects of value weighted indices and through empirical studies we discuss the important facets of index construction that underpin the design of MSCI Value Weighted Indices. The MSCI Value Weighted Indices are based on an objective and transparent methodology by which all the constituents of a standard MSCI parent index are re-weighted using four common accounting measures: book value, sales, earnings and cash earnings -- thereby adding a value tilt to the parent MSCI index towards stocks with relatively lower valuation ratios. Based on the empirical results, the MSCI Value Weighted Indices have historically outperformed their respective parent MSCI indices across different regions, reflecting the value premium, with slightly higher risk, low tracking error and modest turnover. The empirical finding on the long term outperformance of MSCI Value Weighted indices is consistent with the long history of published research on the value premium. MSCI Value Weighted Indices are complementary to capitalization weighted indices and could serve as tools in strategic asset allocation to enable investors to gain exposure to market beta with a value tilt.