Investing in Philippines: What is the MSCI index?

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Sunday, December 4, 2011

What is the MSCI index?

source: http://www.msci.com/


From time to time, you read in the news that some of the listed stocks in the Philippine Stock Exchange is included or taken out from the MSCI index and like you, I also wonder what does that mean.

So let’s learn what does MSCI mean.
MSCI is a leading provider of investment decision support tools to around 5,800 clients worldwide, ranging from large pension plans to boutique hedge funds. We offer a range of products and services - including indices, portfolio risk and performance analytics, and governance tools - from a number of internationally recognized brands such as Barra, RiskMetrics and ISS.
- source http://www.msci.com/about/

So what does MSCI really do? 

Well for fund managers this index serves just like how our very own PSEi do. It acts like a single number to which fund managers look into to base their decisions on certain investments.

Since it is a global indicator, it includes various stocks based on set criteria.  Philippines is included in the following index:
  • MSCI AC (All Country) Asia ex Japan Index
  • MSCI AC (All Country) Far East ex Japan Index
  • MSCI AC (All Country) Pacific Index
  • MSCI ACWI Index
  • MSCI Emerging Markets Index
and our very own index

  • MSCI Philippines Index 
-source: http://www.msci.com/products/indices/tools/ 

So just like our very own PSEi, which is a set of 30 stocks as chosen by the standards set by PSE, the various MSCI to which Philippines is included and our very own MSCI Philippines index acts the same only that it follows another standard. As already said this numbers are one of the indicators fund managers all over the world look at to gauge a certain stock. 

It is like benchmark to which they compare if they would buy, hold or sell their positions. It shows a picture of the whole economy of a certain region or country.

You can also check ishares.com for the MSCI Philippines Investable Market Index Fund .

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Chitika