MSCI Inc, a leading provider of research-based indexes and analytics, has launched MSCI FaCS, a factor classification standard and MSCI Factor Box, an updated style box designed to reflect a modern approach to investing.
Factor Investing is transforming the way investors construct and manage portfolios. And MSCI believes there is a clear gap in the market today for a single framework from which to think about factors. The company’s latest Factor innovation MSCI FaCS and MSCI Factor Box provide investors a common language framework, with an easily accessible and visual representation, for implementing and measuring factor investing strategies.
“We consulted with a wide base of clients across institutional and wealth who are increasingly turning to factor-based strategies. Our latest innovation is the first standard classification that allows a broader investment audience to interpret factor investing through a common language. We are leveraging our history and deep expertise in research-driven factor innovation, along with cutting-edge technology, to bring a standard measurement of factors to a broader range of investors,” says Peter Zangari (pictured), Global Head of Research and Product Development, MSCI.
MSCI FaCS is the framework and standard for evaluating, implementing and reporting factor allocations, based on commonly considered “factors” that have historically driven performance. It includes an extensive global equity factor structure – eight factor groups and 16 factors for more than 70,000 global securities. The factor classification can be viewed at the security level for stock selection or aggregate at the fund or portfolio level to analyse and compare factor exposures – historically key drivers of risk and return behaviour over time.
Factor-based investing continues to gain traction among investors. While widely used by institutional investors for decades, increasingly, registered investment advisors and wealth managers are looking at how they can leverage factor approaches or products on behalf of clients. MSCI Factor Box provides a simple solution accessible by a wider mainstream investment audience which has highlighted the need for industry standard measurement and classification as the traditional style box becomes too limiting.
“We believe standardisation of factor definitions and measurement will allow a wider array of investors to take advantage of factor based approaches as part of a balanced and diversified portfolio,” adds Zangari. “With the launch of MSCI FaCS and MSCI Factor Box, we are bringing much needed transparency as the demand for factor investing continues to grow.”
