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MSCI launches Thematic Exposure Standard to measure portfolio exposure to global megatrends


MSCI has announced the launch of its Thematic Exposure Standard, enabling investors to better understand their portfolio’s economic linkage to long-term structural trends.

The firm writes that thematic investing is an investment approach that targets megatrends in society. From autonomous vehicles to energy efficiency, from robotics and the digital economy to genomics — megatrends represent longer-term structural changes that are often driven by disruptive forces. Until now, there has been no comprehensive and systematic way to analyse fund and portfolio exposures to these trends, the firm says.

The MSCI Thematic Exposure Standard is a new classification framework that enables investors to systematically evaluate the exposure of 40,000 companies to structural trends.  In addition, it enables investors to screen securities with high or low exposure to a theme, create differentiated strategies, and integrate thematic scores across their portfolios. Also, to develop a strategy, assess theme tilts, compare returns and volatility of the strategy by thematic exposure, conduct factor attribution for models that attribute risk and returns to these themes, and assess thematic exposure to a benchmark including any MSCI Index.
The standard will also benchmark performance and holdings against an appropriate index for performance and attribution reporting and monitoring functions, and use the data to complement factor, industry and country analysis.

Stéphane Mattatia, Global Head of Thematic Indexes, at MSCI, says: “The Thematic Exposure Standard underpins MSCI’s mission to bring greater transparency to financial markets and enable investors to build better portfolios. With the Thematic Exposure Standard, investors can analyse fund and portfolio exposures to megatrends that are having significant and lasting impacts on the world using MSCI’s industry-leading research, index and analytical capabilities. This industry-first framework provides investors with the ability to better assess investment risk, differentiate strategies and build more effective portfolios.”


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