MSCI seeks to bring order to private market research
Index provider MSCI has unveiled global classification standards, making it easier for wealth managers to select private asset funds.
With private assets funds becoming more popular in recent years, problems remain around the research capabilities for wealth managers, as these types of funds have traditionally been the home of institutional investors.
Given the complex nature of the investment type, several research houses have indicated their concerns around the products and their suitability for retail investors, while ASIC is also undergoing a review and fund surveillance.
A problem raised by MSCI is the variances of the different assets mean there is a lack of a common system to classify exposure, measure performance, or communicate strategies.
With this in mind, MSCI has launched proprietary asset classification PACS – Private Asset Classification Standards – designed to bring “order, comparability and consistency” to private markets funds.
“Covering a wide array of private assets – including private companies, real estate and infrastructure – PACS provides granular classifications that can be used to benchmark, analyse and communicate portfolio strategies and performance effectively across the investment lifecycle,” it said.
Commenting on the launch, head of private assets at MSCI, Luke Flemmer, said: “Private markets are at an inflection point, with increasing prominence in the global financial ecosystem. With PACS, MSCI is introducing the infrastructure that will define how private assets are identified, compared and analysed globally for years to come.”
This is one of a series of measures that MSCI has developed in recent months to help wealth managers access private markets. It particularly flagged the importance of these in Australia, where the use of private markets funds is at a nascent stage among wealth managers.
In April, it launched two indices to measure the performance of private markets at a company and, secondly, announced a collaboration with Moody’s to provide risk assessment for private credit funds.
These two new index solutions are the first offered by MSCI that seek to measure the performance of private markets at the company level. It also offers the MSCI Private Capital Indexes, which were launched last July to provide closed-ended fund performance.
AUTHOR
Laura Dew
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