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After more than a year of development, MSCI unveiled a major revamp of its international index system in March. The group expanded coverage in the system to include 99 percent of the investable market cap around the globe; the older index system only captured around 87 percent of the world's capitalization, missing out on much of the small-cap space. The expansion into the depths of the small-cap space lies at the heart of MSCI's effort. MSCI launched a separate lineup of small-cap international indexes, and separated all small-cap companies out of its core indexes. The MSCI EAFE Index, for instance, which previously included a smattering of small-cap names, now includes only large- and mid-cap companies. A combined "investable" index series captures the full cap spectrum. It is not clear yet what funds tracking the current MSCI indexes will do: Will they follow the large- and mid-cap indexes or switch to the comprehensive "investable" index series? Either way, MSCI plans to make the transition in a two-step process over a year's time, in an effort to limit any market impact from the turnover. |
