Insights

The rapid pace at which markets and the macro environment are shifting can make it difficult for investors to determine where, when and how to allocate capital. We believe that being “long flexibility” is key to navigating these turbulent times.

We do not categorically exclude any industries from our investment universe; instead, we focus on identifying financially disciplined corporate leaders that are successfully managing their financially material risks and opportunities.

While the short-term outlook for electric vehicles globally may seem uncertain, the transition is quietly accelerating in emerging markets.

President Trump’s executive order to dismantle the U.S. Department of Education (DOE) may be impacting the K-12 sector, but we believe in-depth credit analysis will remain fundamental to choosing issuers that will perform well.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The BEAT held a live webinar on April 15 featuring Jim Caron, Andrew Slimmon and Jitania Kandhari.

With tariffs potentially a headwind for growth and earnings, the International Equity Team explain why being in the “not owning” bucket may continue to be a positive.

While the economic conditions of 2025 and beyond remain uncertain, the historical performance of the 60/40 strategy over various economic regimes indicates that the attractive growth and diversification benefits across a range of outcomes may make this a timely consideration as shown in the next two charts.

Critical industrial and manufacturing processes depend on the availability and quality of freshwater. As a result, disruptions in freshwater availability may pose financially material risks to investors. However, corporate disclosure and data remain a challenge due to lack of standardization and difficulties collecting data. In light of these limitations, Calvert utilizes a proprietary method to assess water risks at the sector and company level, while encouraging companies to coalesce to develop water reporting protocol similar to the Greenhouse Gas reporting protocol.

Many cuts for individual taxpayers are set to expire after 2025, and the package at stake prioritizes tax cuts for the highest-income Americans over low-income and middle-class families.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The Middle East and North Africa (MENA) countries are engaged in a flurry of activity to deliver on a series of ambitious plans that will encourage strategic investments, enact reforms and transform the region’s economy. Amy Oldenburg, Head of Emerging Markets Equity, explores the new face of MENA.

The tariffs announced on Wednesday, April 2 represent one of the largest tax increases in U.S. history. Cyril Moulle-Berteaux of the MSIM Global Multi-Asset Team shares the teams’ analysis of the tariffs’ likely impact on the economy and markets.

In his most recent TAKE, Senior Portfolio Manager Andrew Slimmon responds to the question whether the tariff induced selloff is an opportunity to be bold and add cash to equities or better to hunker down and wait for a more attractive entry point?.

Insight on loan market fundamentals and the role of floating-rate loans within portfolios.

Overview of the trends and developments in the muni bond markets.

In-depth review of fundamentals and valuations across emerging markets debt.

The Broad Markets Fixed Income Team reflects on the events of March, but also discusses the market movements that transpired the first few days of April.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Use The BEAT as your timely resource for this month’s markets. Each edition gives you ideas and insights that show you how to navigate the current investment environment.

The Trump Administration has imposed a 25% additional tariff on automotive imports effective April 3, claiming it will fuel domestic manufacturing. But critics fear it may put the brakes on automakers that depend on global supply chains.

Investors and corporate leaders are struggling to keep up with the pace of political events, which are largely orchestrated by the new Trump administration. More than ever, investors should take heed and re-examine a now engrained view that U.S. equities remain the only game in town. The U.S. is increasingly pursuing more isolationist economic and foreign policies. We believe this may create greater cohesion and cooperation among regions like Europe.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The valuation differential between international and U.S. Equity remains one of the strongest arguments for considering an allocation outside the U.S., even with the outperformance experienced so far in 2025. While many drivers behind a more constructive outlook on the merits of an allocation to international equity are macro related, our confidence is built from the bottom up, through a stock picker’s lens. At the heart of our investment approach is a commitment to investing in sustainable business models as the mechanism to compound assets for our clients.

The emergence of China’s DeepSeek poses a significant challenge to U.S. dominance in artificial intelligence and signals a dual-track approach to AI development. While a handful of companies lead the cutting edge research, a low-cost AI sector is beginning to take shape. Amay Hattangadi and Samson Hung explore potential investment opportunities in emerging markets driven by the wider adoption of AI.

Amid risk of an escalating global trade war and ongoing geopolitical instability, we examine how fading U.S. exceptionalism, robustness of credit spreads and rising market volatility impact global fixed income markets in our latest video.

Things are changing fast and remain fluid. Whether it is for better or worse we do not know. The Broad Markets Fixed Income Teams explores the implications for investors.

The Morgan Stanley Private Credit team defines Private Credit, the growth drivers propelling the asset class and why investors should consider adding European Private Credit to their portfolios.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Seeking tax efficiency isn’t just about selecting the right investments, it is also about how and where you hold them.

New pricing patterns and rising competitiveness are helping to distinguish GP-leds from the LP-led side of the secondaries market.

Semi-liquid evergreen private equity vehicles may provide individual investors access to many of the benefits of private equity investing with a better user experience and the potential for long-term compounded returns.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

In today’s fast-evolving economy, technology transcends sector classifications. It’s re-shaping growth trajectories and redefining operational excellence as digital integration, AI and cloud computing have become essential engines of competitive advantage.

Use The BEAT as your timely resource for this month’s markets. Each edition gives you ideas and insights that show you how to navigate the current investment environment.

While the U.S. market broadly ended 2024 at relatively lofty valuations, our Opportunistic Value approach to investing gives our team the ability to construct portfolios based on identifying movements within specific companies that we believe are inconsistent with the underlying fundamental picture of the stock.

Extrapolation of fundamental trends has resulted in extreme overvaluation, overoptimism and overownership of many assets, most particularly U.S. assets. As such, investors should consider non-U.S. stocks denominated in non-US currencies as well as Value and small cap stocks in the U.S. and abroad. Cyril Moulle-Berteaux explains.

The increasing number of tariff-related executive orders marks a distinct shift in policy. At this time, we believe most of the companies in our quality portfolios should face limited direct impact from tariffs, given their skew towards services, while local manufacturing, high gross margins and pricing power may dampen the impact for the portfolios’ goods producers. In the event of any economic slowdown, we would expect our quality portfolios’ earnings to prove more resilient than the market’s.

This white paper discusses how climate risks and three secular trends in commercial real estate are driving new capital strategies in the industry.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

In his most recent TAKE, Senior Portfolio Manager Andrew Slimmon presents reasons why market volatility in the third year of an equity bull market is a normal and healthy signal.

What are the key themes that will shape the global economy in 2025? From shifting trade dynamics to industrial innovations, demographic transitions, and space exploration - every trend holds opportunities. Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets Equity; Portfolio Manager, Passport Equity, outlines her ten (plus bonus) Key Themes.

The mega trends transforming the U.S. are also providing global opportunities for savvy investors but at better prices. Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets Equity; Portfolio Manager, Passport Equity, explores the global edge in her 10 Key Themes for 2025.

While we wait for the White House to clarify policies that may influence financial conditions, we look in depth at why tariffs, monetary policy and credit fundamentals matter to global fixed income markets in our latest video.

The Morgan Stanley Private Credit team traces the rise of direct lending from its small, early origins to its present role as a mainstay of the $1.8 trillion private credit industry.

While financial markets had a good January, the future remains quite murky. The Broad Markets Fixed Income Team explores.

Investors seek opportunities with gaps between price and value. A common approach to estimate value is to consider expected value, the sum of the products of various payoffs and their associated probabilities. We discuss some of the issues with the calculation of expected value, what the payoff picture means for investing, the implications of volatility drag, the psychology of dealing with probabilities and payoffs, and how these ideas can be helpful for investing in various asset classes.

Explore key insights on the outlook for emerging markets debt, including which trends to watch and why a focus on fundamentals may matter more in 2025.

While the US economy continues to look healthier than other developed markets, we think positive surprises may be tougher to find than in the last two years. Elevated equity multiples, modest VIX and BBB-rated bond spreads at their lowest levels this century suggest the market doesn’t share those doubts. As investors, we prefer steady compounding through decent top-line growth and resilient earnings at a reasonable multiple.

The true winners of the U.S.-China tug-of-war may turn out to be a number of overlooked frontier and small emerging market countries that are benefiting from historically low valuations. Steven Quattry points out that these economies, which are not in the direct crosshairs of trade wars, present unique uncorrelated investment opportunities and might be poised for rapid growth.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Stay informed on the evolving fixed income landscape in 2025 with our latest video, where we explore the role policy divergence, rising dispersion and volatility will likely play in shaping coming risks and opportunities.

Discover trends for high yield bonds, including their potential suitability to help investors meet their income and total returns goals in 2025 and beyond.

Use The BEAT as your timely resource for this month’s markets. Each edition gives you ideas and insights that show you how to navigate the current investment environment.

What are the forces that will shape 2025? Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets Equity ; Portfolio Manager, Passport Equity, outlines her ten Key Themes for the upcoming year.

The Global Opportunity team shares its annual update on integrating ESG within the investment process, the carbon intensity of the portfolios and company engagement activity.

Dispersion, duration and yield curve shifts can be pivotal to returns in the agency MBS market. In our latest insight, we dig into the detail on these factors and more to show why they matter.

In his January TAKE, Senior Portfolio Manager Andrew Slimmon questions whether the 2025 equity market will be consistent with the third year of a bull market, which tends to be mediocre at best. Or will 2025 be led by a technology revolution and a gateway like the roaring late-1990s?

Kendal Cehanowicz, Portfolio Manager, Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy and the implications for short-term investors.

Curious about the future of monetary policy, government debt and credit markets? Watch our latest video on the outlook for global fixed income markets in the coming year.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Beijing has unveiled a series of stimulus packages aimed at revitalizing China’s economy. However, Jitania Kandhari, Deputy CIO of the Solutions and Multi-Asset Group, believes China’s structural weaknesses which include significant debt, a property bubble, underwhelming domestic consumption and trade pressures, cannot be resolved by stimulus measures alone.

Saudi Arabia is pulsing with activity as it reaches the half way point of an ambitious plan to transform its economy and reshape its global image by 2030. Amy Oldenburg, Head of Emerging Markets Equity, examines the Kingdom’s progress.

Malaysia’s recent stability and steady growth are paving the way for its government to implement critical reforms. The country is well-positioned for increased investments, particularly in its expanding data center sector, capitalizing on the ongoing “tech war” between the U.S. and China.

"As we gain information about property damage, we are evaluating variables such as potential revenue loss, level of cash reserves available to bridge lost revenue, and, most importantly, the insurance coverage a facility has for both property and business interruption."

With the game-changing 2024 election victory of South African president Cyril Ramaphosa setting the stage for a new political and economic era, Amy Oldenburg, Head of Emerging Markets Equity, focuses on a report by Paul Psaila on how the new political landscape may impact the country’s economic future.

"We believe investors can benefit from aligning themselves with a circular economy."

The last five years have been full of surprises. In their Bulletin, the Broad Markets Fixed Income Team reviews the past month and looks ahead to 2025.

"High-yield munis lower correlation to the S&P 500 could serve as a ballast for portfolios in times of equity volatility."

"When it comes to the agency MBS market, headline index figures can conceal more than they reveal about actual investment potential within the sector."

Markets have become increasingly charged, unpredictable and narrow, evidenced by the risk-on rally in response to Donald Trump’s presidential victory and the dominance of US tech giants, aka the "Magnificent Seven". For a distorted index which appears to be priced for perfection, any knock or fade to earnings expectations may spell trouble —presenting risks for index huggers but opportunities for our bottom-up, benchmark-agnostic approach focused on the compounding of high quality company fundamentals.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Insight on loan market fundamentals and the role of floating-rate loans within portfolios.

Overview of the trends and developments in the muni bond markets.

In-depth review of fundamentals and valuations across emerging markets debt.

Significant debt, a property bubble, underwhelming domestic consumption and trade pressures are part of the structural weaknesses in China’s economy that stimulus packages cannot resolve alone. Jitania Kandhari explains.

As we enter 2025, the Broad Markets Fixed Income Team provides a comprehensive analysis of anticipated trends in fixed income markets, highlighting key areas of opportunity and caution for investors.

Going forward, we expect to continue to invest in projects or issuers that help fight climate change, attempt to address income inequality, and provide access to health care, clean water and affordable housing.

Ben Huneke, Head of Investment Management, and Jim Caron, Chief Investment Officer of the Portfolio Solutions Group, explore how The BEAT can help you stay on top of the markets and where we see compelling investment opportunities in 2025.

Ashwin Krishnan, co-head of North America private credit and the head of opportunistic credit at Morgan Stanley, met with Shubham Saharan at 9fin to discuss opportunistic credit strategies within the private credit market in 2025 as investors look to continue diversifying their holdings. Krishnan explains the growing interest in capital solutions, private markets distressed debt, and asset-based credit strategies and how it has become a core focus of the alternatives platform at Morgan Stanley Investment Management.

In its annual Engagement Report, the Fixed Income organisation provides details on how their investment teams are working with bond issuers on Environmental, Social, and Governance (ESG) issues to help generate better financial and sustainability outcomes.

China is increasingly following in the footsteps of manufacturing giants like Germany and Japan and relying on exports to sustain growth, without a commensurate domestic market to absorb the production.

Our 1GT team discusses their five key lessons learned from Climate 1.0 and how they can be applied to climate investing today.

2024 has experienced one of the top momentum runs of the past thirty years. Historically, such strong performance has led to a near-full reversal in performance in the subsequent year. Cyril Moulle-Berteaux explains.

We believe that hedge funds are poised to capitalize on what could be a rapidly changing environment, while delivering a source of uncorrelated return and diversification within portfolios.

New political realities, combined with monetary, geopolitical and general economic crosscurrents are likely to make 2025 a dynamic year.

Discover why we believe that, as venture-backed companies stay private for longer, there is an increased need for growth equity and hybrid capital.

Discover why we believe robust private equity activity has a potential to bolster private credit with growth across a diverse landscape.

Counterpoint Global’s Disruptive Research revisits their 2017 paper on Autonomous Vehicles, highlighting key developments, challenges, and opportunities around trucking and robotaxis. 

Kendal Cehanowicz, Senior Portfolio Manager, Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy and the implications for short-term investors.

In today's environment of greater deregulation and political uncertainty, we believe Calvert's deep responsible investment experience and research expertise gives us broader and deeper insight into the risk and reward potential of each investment.

As the global macro-economic environment continues to improve, the case for real estate investing has become more compelling. After a period of moderation and stabilization in 2024, we believe that 2025 will see a transition into the next upcycle for real estate. Inflation is trending down, interest rates are falling, and valuations are troughing.

How will bond markets decipher the true state of economy and the scale of the incoming administration's polies? The Broad Market Fixed Income Team explores.

What do changes in the global economy and policy uncertainty mean for fixed income markets in 2025? In our latest video, we discuss how these factors may influence markets and the steps we’re taking to navigate rising complexity in the upcoming year.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Eight years ago, Saudi Arabia initiated an ambitious plan to transform its economy and reshape its global identity by 2030. Amy Oldenburg, Head of Emerging Markets Equity, looks at the Kingdom’s progress to date.

The investment environment to start the new year is quite interesting. The Portfolio Solutions Group looks at five key themes going into 2025.

Simply because someone is a client doesn’t necessarily mean that person is open to listening to your ideas, does it?

Collaboration with existing clients and prospective clients is essential for healthy and productive relationships.

An approach to helping you attract more clients as well as deepen connectivity with your current clients. We call it “Leaving Yourself Behind.” 

Prospective clients and clients alike often might recognize that making a change is in their best interest, yet many fail to do so. It’s understandable.  This can be where the 3 Dynamics come into play.

Did you know there are tax benefits from planning how to give? We're going to cover three common giving scenarios and provide options designed to help maximize charitable contributions.  

Harness the power of a curiosity gap—the space between what someone knows and what they are intrigued to know.

Grow your business without being perceived as a salesperson.

Get referrals without asking for them by including memorable phrases in client conversations to help you consistently capture referable moments.

Whether virtually or in person, the same fundamentals apply for running purposeful, coordinated and conclusive first meetings.

Every phone call with a prospective client has the potential to lead to a meeting. We use three sports metaphors to showcase the fundamental skills that can help you convert follow-up phone calls into first meetings.

Networking events typically present two types of awkward moments—greeting a stranger and leaving a conversation.

There are several types of incentive compensation each with varying rules for vesting, purchasing, and selling. Navigating these rules requires tax-aware advice.

Markets are bullish on Trump’s second term, hoping for tax cuts and better growth. We expect no net stimulus and a decent size hit from tariffs and immigration. This should be bullish for bonds as the Fed continues cutting, but could be a disappointment for frothy stocks.

While some investment has been made in recent years under the Biden administration's Infrastructure Investment and Jobs Act (IIJA), federal funding of national infrastructure is far below required investment levels.

"In his December TAKE, Senior Portfolio Manager Andrew Slimmon details why he believes the “optimism phase” of the bull market is commencing right on cue and what that holds for 2025."

We publish some of our favorite charts that have gone unused or overlooked. We place the pictures in five categories: overall valuation, empirical regularities, capital intensity of big energy versus big technology, corporate performance, and investment management. Some challenge conventional wisdom, others address empirical observations that remain unexplained, and a handful compel a nuanced view.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

After unwinding COVID distortions, the health care sector has significantly underperformed the broader market. Yet it ranks high on our two favoured quality metrics, ROOCE and gross margins, with the second highest EPS growth of any sector in the MSCI World Index over the past 20 years. Its strong long-term outlook is reinforced by a rapidly ageing global population, untapped global market opportunities, the nondiscretionary nature of its demand, and broad technological innovation potential.

Discover why the availability of semi-liquid vehicles is rising across the alternative investment space, with the largest increase in private credit solutions.

Do all tough reforms have a high political cost? Reformist governments in Southern Europe are proving otherwise. By taking important policy decisions early, governments in Cyprus, Italy and Greece are not only seeing stronger growth than their norther peers but rising popular support as well.

How can the game of tennis help optimize your follow-up conversations with prospective clients?

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

In his November video bulletin, Chief Investment officer Michael Kushma shares his thoughts on where fixed income markets may be heading now that the US presidential election has passed. Watch to find out why he’s focused on three key themes: Trumponomics 2.0, steepening yield curves and areas of opportunity for fixed income investors.

The Broad Markets Fixed Income Team explores the implications of the U.S. elections for bond investors.

Multinationals and sovereign wealth funds have taken notice, snapping up large stakes in publicly listed Egyptian firms across industries including industrials, education, digital payments and consumer staples.

These proposed changes come with a hefty price tag. The nonpartisan Congressional Budget Office (CBO) estimates that extending the Trump tax cuts for the next decade would fatten the deficit by $4.6 trillion.

Jitania Kandhari, Deputy CIO of the Solutions and Multi-Asset Group of Morgan Stanley Investment Management, joined Bloomberg Surveillance to discuss her views on 2025 thematic investing ideas.

Insights from the IMF's fall conference reveal a nuanced global outlook, underscoring the critical role of country fundamentals in emerging markets. Read our on-the-ground report for the key highlights and analyses.

Investors should monitor the growing dominance of U.S. fiscal policy on markets in the second half of 2024 and beyond, and consider opportunities in emerging market debt, U.S. equities, loans and real estate.

Chinese stocks' superficially low multiples do not represent a compelling reason to go overweight China until policy measures sufficient to solve its debt deflation problems are implemented—fade the stock rally.

Today’s new interest rate and inflation regime deviates significantly from the past 40 years. As such we believe investment professionals should consider modifying their investment process.

Geothermal energy can supply reliable, sustainable, baseload power offering significant potential as an energy source, but commercial deployment has been limited. Our 1GT team co-hosted a roundtable during Climate Week to discuss future pathways.

Investing in Calvert Mortgage Access Fund can provide exposure to a distinct market segment that offers attractive return potential while helping to address wealth inequality and promote broader access to homeownership.

Emerging markets are buzzing with renewed manufacturing activity after years of sluggishness. This resurgence is fueled by strong government support, improving macroeconomic conditions and new supply chains. Amy Oldenburg, Head of Emerging Markets Equity highlights a recent report by Jitania Kandhari and Saumya Jain explaining the transformational changes that are taking place.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

As investors seek to diversify their portfolio exposures beyond traditional assets, alternative lending may offer attractive absolute and risk-adjusted return characteristics.

"In his November TAKE, Senior Portfolio Manager Andrew Slimmon discusses his post-election thoughts on the equity markets and why, he expects potential strength to continue into 2025, albeit more muted."

Michael Cha, Executive Director Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy, including interest rates, and the implications for short-term investors. Listen now.

Chinese stocks are likely still underowned by local and global investors but their superficially low multiples do not represent a compelling reason to go overweight China until policy measures sufficient to solve its debt deflation problems are implemented.

We finance projects in an array of markets including senior living, affordable housing and community development districts, and each case is highly dependent on the prices and supply of homes.

What are the economic and corporate consequences of higher tariffs? In this insight, our Broad Markets Fixed Income team explores the potential trade-offs and knock-on effects of raising tariff rates.

Consumer staples are now at a near 25-year low in terms of relative valuation and at their lowest weight in the MSCI World Index this century. Yet the sector has demonstrated resilience despite an exceptionally turbulent four years. With growth driven by recurring revenue from the everyday products they sell, their operating resilience during economic downturns gives staples companies that exhibit agility, innovation and high levels of brand investment a key role in our portfolios.

A successful approach to operational value creation has been key to driving successful private equity outcomes over the last decade. It is increasingly important as we adjust to an environment of higher interest rates and inflation, lower levels of financial leverage, and uncertain macroeconomic growth.

Emerging markets debt is currently benefitting from a favorable macro backdrop, attractive real yields and growing investor appetite. Will these tailwinds continue through the remainder of 2024 and what should investors be on watch for? Read the latest views from our Emerging Markets Debt team for insights into these questions and more.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The latest edition of Engage, the International Equity Team’s semi-annual update on their ESG engagement activity.

Over the busy market period between January 2022 and September 2024, the Federal Reserve hiked rates 11 times and then subsequently started easing.

Amid market uncertainty, investors may be seeking ways to add resilience to their portfolios. Long-short equity strategies have the potential to deliver steady returns in volatile markets.

Elevate client conversations with advanced planning topics.

Amy Oldenburg, Head of Emerging Markets Equity at Morgan Stanley Investment Management, believes savvy investors should take a closer look for hidden gems in emerging and frontier markets.

Given a strong consensus for a Soft Landing and lingering Recession fears, No Landing would be the most contrarian scenario for markets. In fact, there are some hints that the dichotomy between strong spending and weak labor markets could resolve in favor of No Landing.

Is market optimism about rates too high? Find out why high volatility potential and tight spreads are making us choosier about bonds.

The Broad Markets Fixed Income Team explores the impact of the Fed's Sepember rate cuts for fixed income investors.

Given a strong consensus for a Soft Landing and lingering Recession fears, No Landing would be the most contrarian scenario for markets.

There is potential for significant change if Congress does not extend the 2017's Tax Cuts and Jobs Act (TCJA) when it expires at the end of 2025.

In our view, it has become critically important to incorporate the increased environmental risks into our investment decision-making process, because over time climate change may result in population shifts, declining tax bases and increasing debt loads, which could lead to credit stress.

Our experience as a responsible investor shows that financially material topics are evergreen because they relate to value creation and risk management, which are relevant to investors regardless of the political climate.

Strategy explains how a firm builds a moat around its business to pursue sustainable value creation. We begin by showing why strategy matters while also distinguishing between industry and company life cycles. We turn next to industry analysis as we get the lay of the land. We then discuss industry structure and disruption and dis-integration. We finish with firm analysis. We examine the sources of added value and review pricing decisions, regulation, and brands. We include a checklist.

While calm has returned following summer’s brief market squall, the sell-off acted as a good test run for our global portfolios, which appeared resilient in the face of these fears, actually rising 1% while the MSCI World fell 7%. With a benign outlook priced in again as though the scare never happened, a portfolio delivering resilient earnings at a reasonable valuation may offer some high quality defence—as it did this summer.

We own a leading elevator company that services over 2 million elevators globally—which typically remain in service for decades. As the installed base of elevators around the world continues to grow steadily, this creates a very reliable profit stream that illustrates our preference for long-term compounders for long-term investors.

Our life sciences companies form a crucial part of the health care supply chain. Their products are a fraction of their customers’ cost base, they benefit from the nondiscretionary nature of health care demand and their regulatory framework makes it very difficult for customers to switch suppliers—making them a good example of the resilience we seek.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

One of our holdings has been around since 1892 and is enjoyed 2 billion times a day. With a strong brand, entrenched intangible assets, high returns on operating capital and significant pricing power, it’s exactly what we look for.

Within the private alternatives universe, private equity is one of the most rapidly growing asset classes. With a range of strategies, private equity investing offers distictive qualitative characteristics that differentiate the asset class.

Central banks are lowering policy rates, but the pace and magnitude varies by market. The Broad Markets Fixed Income team explains what the variable policy paths could mean for fixed income investing ahead.

Vishal Khanduja joined CNBC Squawk Box Asia to discuss his view that the U.S economy is on track for a soft landing and how that impacts his fixed-income strategy.

The MSIM Hedge Fund Team explores the ways in which hedge funds may directly benefit from a higher cash yield environment making them compelling options as sources of returns and diversification.

In-depth review of fundamentals and valuations across emerging markets debt.

Overview of the trends and developments in the muni bond markets.

Insight on loan market fundamentals and the role of floating-rate loans within portfolios.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

After four years of political turmoil, Malaysia’s recent stability is paving the way for the government to implement critical reforms, ultimately making the country’s prospects promising. Amay Hattangadi, Uday Tharar and Aayushi Kukreja explain.

To put things into perspective, the fiscal year 2021 pandemic-related deficit of $1.2 billion was the largest in the city's history, and current out-year shortfalls are expected to be either near or exceed this amount.

Falling interest rates may curb the yield and income from various fixed income assets, making dividend-growing stocks, an attractive portfolio option, even more compelling as the Fed pursues a rate-lowering path.

Direct lending continues to offer compelling relative value compared to other asset classes and offers attractive diversification alternative to public fixed income. Further, when considered in the context of public markets, direct lending has significant room to grow.

In addition to the potential diversification benefits of adding duration to fixed income portfolios, we also think it is prudent to gradually extend out the yield curve and risk spectrum in order to preserve today's attractive yields.

Craig Brandon, Co-Head of Municipals at Morgan Stanley Investment Management, joins CNBC The Exchange to discuss how rate cuts will affect municipal bonds, how the election and tax rates could impact municipals, and more.

When the Fed says "cut," investors ask "How deep?" Find out where we stand on current rate forecasts, plus our outlook for the credit market and the US dollar.

Morgan Stanley Private Credit’s Ashwin Krishnan Talks Opportunistic Strategies, Outlook for 2024

Lauren Hochfelder, Co-CEO of Morgan Stanley Real Estate Investing, joined Bloomberg The Close to discuss the megatrends driving investment opportunities in commercial real estate, including the impacts of global supply chain changes, aging demographics and office preferences.

With Indian public markets having experienced a strong run-up since 2020, global allocators have been turning to Indian private equity. In this paper, we aim to examine the promising performance potential of Indian private equity.

The private-side economics of the office commercial real estate (CRE) market is already showing significant strain, and while these struggles have the potential to affect major municipalities' budgets, we remain comfortable with the overall credit health of major cities.

Jitania Kandhari, Deputy CIO of the Solutions and Multi-Asset Group of Morgan Stanley Investment Management, on Bloomberg Surveillance to discuss the equity and fixed income markets. She speaks to the impacts of inflation, how investors should think about the 60/40 allocation and how the dollar view impacts the positioning in international markets.

Our hedge fund team discusses their outlook and the opportunities they are seeing for the remainder of 2024.

Co-head of emerging market debt Brad Godfrey shares the potential diversification, income and return advantages of a growing and powerful asset class.

Co-head of emerging market debt Brad Godfrey shares the potential diversification, income and return advantages of a growing and powerful asset class.

Fixed income put in another solid performance in August despite unprecedented volatility in the first two weeks. The Broad Markets Fixed Income Team explores.

Michael Cha, Executive Director Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy, including interest rates, and the implications for short-term investors. Listen now.

"In his September TAKE, Senior Portfolio Manager Andrew Slimmon discusses why, like in previous US Presidential election years, this time of equity market volatility is a period to be a patient and intentional investor, in preparation for a likely strong finish to 2024."

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Now that inflation is back under control, if the economy continues to slow, the Fed is likely to cut below neutral in order to stimulate growth once again.

The small-cap universe, as measured by the Russell 2000®, offers significant opportunities for capital appreciation when approached with a quality lens, even in a period characterized by large-cap dominance and increased market concentration.

Craig Brandon, Co-Head of Municipals at Morgan Stanley Investment Management, joins Bloomberg Surveillance Radio to discuss the muni market, its focus on infrastructure, the opportunity in high yield munis right now and how sectors such as commercial real estate may impact the municipal market.

Shareholder-friendly policies, coupled with cheap valuations, attractive industry dynamics, and our positive macro view are among the reasons we believe the Irish banking sector offers some of the most compelling investment opportunities in the global equities landscape today.

Mark van der Zwan, Chief Executive Officer for Morgan Stanley Investment Management's Hedge Fund team, appears on Resonanz Spotlight to explore the past, present, and future of hedge fund investing

The Russell 1000 has decarbonized nearly 50% over the past six to seven years, based on Scope 1 and 2 carbon intensity. Our research indicates the Mag 7, with their outsized market share and favorable Scope 1 and 2 emissions, have played a significant role in that trend.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

We expect money on the move to be a tailwind to bond investors everywhere, as cash looks for a new, 'yieldier' home amid a collapse in money market yields.

Assembly lines worldwide are humming with activity, signaling a promising revival of the manufacturing sector after decades of sluggishness. In emerging markets, this capital expenditure revival is being supported by governments and better macro conditions. Jitania Kandhari and Saumya Jain explain.

While we expect the temporary provisions to expire, we anticipate a proposal to keep current individual rates for those with incomes under $400,000 while raising rates for individuals with higher income and increasing tax rates on investment income for higher income taxpayers.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

While many of the companies we own are large businesses with well established, familiar brands, in our experience, excellent companies and investment opportunities can also be found by looking at players focused on specialised niches — particularly those that play a critical role within a market and enjoy close customer relationships. Undeservedly – but perhaps not surprisingly – these companies often sit outside the market limelight, and can fall between the cracks of sell-side coverage.

Changes in required minimum distribution age enable workers to leave more cash in retirement accounts longer to help grow savings, part of sweeping legislative and regulatory efforts to whittle the potential retirement savings gap.

Since our positioning is bottom-up, we don't maintain exposure to every sub-sector just for the sake of it. We only invest where we see a true opportunity to close the gap to a company's intrinsic value.

Discover why the current market is conducive to market-neutral strategies, with the ability to generate alpha on both the long and short sides of portfolios.

It is important to remember that following a 5% decline in global equities since 1999 (based on the MSCI ACWI Index), subsequent median returns have been 13% over the next 12 months with positive returns two-thirds of the time!

Political analysis should focus on but not be limited to elections. The big stories in Asia this year have been elsewhere.

Explore the latest expectations for Fed rate cuts, reasons to closely watch the US elections, and why we continue to favor short-duration credit.

Teetering on the edge of bankruptcy as the Berlin Wall came down, Poland defied expectations to become a critical manufacturing hub for western Europe. In this video, Amy Oldenburg, head of Emerging Markets Equity, explores how Poland transformed its economy and became one of the most successful nations to emerge from the former Soviet bloc.

Bundling charitable deductions can help individuals accumulate enough itemized deductions to exceed the standard deduction for one year, and then claim the standard deduction in the years when the donations are dispersed to charities.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Despite central bank’s reluctance to pre-commit to policy paths, bond investors’ optimism has increased. The Broad Market Fixed Income Team explores.

Andrew Slimmon, Head of the Applied Equity Advisors Team, offers a timely perspective on what is shaping the markets now as well as insights on investment opportunities and risk within global equities. Listen to his Market Alert.

With the “democratization” of alternatives, many individual investors now have access to investment strategies that have the potential to improve performance and diversification.

In a remarkable twist of events, South African President Cyril Ramaphosa turned a potentially career-ending electoral defeat into a victory that may reshape the nation's political and economic landscape. Paul Psaila explains.

Jeff Levin and Ashwin Krishnan discuss private credit, its outlook and where they see opportunities, on InsuranceAUM’s podcast.

Head of Morgan Stanley Capital Partners, Aaron Sack, discusses how to build a successful middle market buyout strategy, and the role of private equity in market growth.

As analysts, our job is to distinguish between weak and strong institutions, seeking to ensure our portfolios are invested in schools with solid balance sheets, brand recognition, pricing power and consistently strong operating performance.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Michael Cha, Executive Director Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy, including interest rates, and the implications for short-term investors. Listen now.

Corporate reforms, while positive, are unlikely to fully offset the deterioration of a sector vulnerable to fluctuations in capital expenditure budgets. Moreover, Japan's cultural emphasis on conformity and continuity adds a level of inertia that investors may be underestimating.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The market seems to be dominated by the twin beliefs in the invulnerability of the U.S. economy and the massive impact of GenAI. This is not the easiest environment for an investment philosophy that seeks established winners with resilient earnings in tough times. However, high expectations generally, and increasingly for one company in particular, make us nervous about the market’s prospects. We remain steadfast in following our quality process and focus on absolute, long-term compounding.

Assets used to establish charitable split-interest trusts for income beneficiaries other than a donor are typically excluded from the donor's taxable estate. When established properly such transfers are treated as completed gifts for gift tax purposes upon the donor's contribution to the trust, and now may be the time to take advantage of potential opportunities to retain more generational wealth, creating a charitable legacy.

In recent years, multi-manager platforms (Multi-PMs) have completely transformed the hedge fund world. In this FAQ, we answer fundamental questions about these Multi-PMs. What are they and why are they attracting so many investors?

Consilient Research considers the phenomenon of companies that both issue and retire shares around the same time. This behavior may fail the central goal of capital allocation, which is to buy low and sell high. Which one is it?

Co-Head of Broad Markets Fixed Income Vishal Khanduja discusses the probability for a U.S. soft landing, the heightened political uncertainty and how investors should think about positioning for volatility.

In his July TAKE, Senior Portfolio Manager Andrew Slimmon reiterates the rational behavior of the stock market so far this year given corporate fundamentals and stock performance appear closely aligned. And discusses why, in spite of nearer term volatility, the market could finish the year higher still.

We believe a better strategy may be to actively invest in opportunities outside the largest names, by focusing on fundamentally sound businesses with higher revenue and cash flow outlooks, diversified end markets and attractive valuations.

Strong credit fundamentals, positive technical factors and attractive yields make the outlook for high yield municipal bonds appear bright.

Insight on loan market fundamentals and the role of floating-rate loans within portfolios.

The impressive performance of corporate credit markets to start the year has prompted many investors to begin seeking out alternative sources of yield and total return in the global fixed income markets.

In-depth review of fundamentals and valuations across emerging markets debt.

Overview of the trends and developments in the muni bond markets.

June was a mixed month for fixed income. Lower US yields were supported by weaker-than-expected inflation and increased market expectations of further rate cuts.What was the impact on fixed income markets? The Broad Markets Fixed Income team explains.

One potential expansion of the breadth of the Sixteenth Amendment is a proposed net wealth tax, which could impact unrealized and undistributed income. Moreover, a proposed billionaire minimum tax would effectively tax unrealized and undistributed income one time.

While active versus passive is a well-worn debate, it needn’t be an either/or decision. We would argue there’s a strong case for both index investing and active management to co-exist in portfolios. While passive funds provide broad-based exposure and nimble, cheap access to tactical themes, there is still an opportunity to be selective – particularly given indices’ biases. When stock prices become disconnected from fundamentals, skilled stock pickers can take advantage if they have the luxury of a longer time horizon and a lopsided multiples-powered bull run still has momentum.

Small emerging and frontier market countries have weathered crises this decade, but are implementing reforms based on orthodox economic policies. Despite massive currency depreciations, the equity markets in many of these countries, such as Argentina and Pakistan, have generated stronger earnings per share—in dollar terms—compared to the broader MSCI EM Index. Steven Quattry explains why these countries merit a closer look.

Portfolio Manager Dónal Kinsella explains three key areas that high yield bond investors should consider and why a discerning approach to credit selection is key.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The second half of 2024 will be impacted by interest rates, inflation and the U.S. presidential election, among other factors. The Portfolio Solutions Group reveals our key themes for the second half of 2024.

Debtwire caught up with Ashwin Krishnan, co-head of North America private credit and head of opportunistic credit at Morgan Stanley Private Credit, in a conversation debating the merits of sponsored versus non-sponsored deals and formalized partnerships for deal origination.

In a discussion with InvestmentNews, Jim Caron, Chief Investment Officer of the Portfolio Solutions Group, explains why he believes U.S. stocks may suffer a setback before year-end and that Japanese equities are currently his highest conviction overweight, one that offers attractive upside.

Learn why our Hedge Fund Team believes the shift in the alternative investment space has evolved alpha, and how multiple ARP strategies are critical components of systematic liquid alternatives.

The market is pricing in rate cuts for the U.S., as global central banks move to ease policy. But are investors getting ahead of themselves? The Federal Reserve remains cautious, and hard data suggests rate-cut delays – not cuts. Will markets reassess their views? Will the Fed change tact? And will rate uncertainty affect opportunities within global fixed income?

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The decision sheds light on the need for other small business owners to scrutinize the nuance of buy-sell agreements and consider the estate tax liabilities, as well as life insurance policies.

Michael Mauboussin and Ted Seides discuss the recent Consilient Observer article on pattern recognition, including when it works and when it doesn’t. They then transition to discussing the changing nature of public markets, inspired by another of Michael’s recent research reports, Birth, Death, and Wealth Creation. They examine which companies have had the largest stock market capitalizations and how that population has changed.

Despite still high levels of growth and inflation (relative to targets), bond investors have become optimistic about future Fed policy. What is the impact on fixed income markets? The Broad Markets Fixed Income team explains.

In his June TAKE, Senior Portfolio Manager Andrew Slimmon discusses earnings revisions as a major driver of stock performance this year and talks about the importance of using highly active managers and avoiding closet indexers.

Our Emerging Markets Equity annual stewardship report illustrates our proactive engagement with portfolio companies to navigate operating landscapes and assist them in their growth. Discover how we initiate progress in the global energy transition, tackle regulatory challenges and encourage greater corporate transparency and disclosures, especially with regards to executive compensation issues.

Michael Cha, Executive Director Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy, including interest rates, and the implications for short-term investors. Listen now.

While the fundamentals and investment thesis for senior housing are compelling, the subtleties of different care segments and the service-oriented nature of caring for elderly residents create operational risk, requiring a nuanced investment strategy and dedicated operating expertise.

David Miller, Morgan Stanley Investment Management's Head of Global Private Credit & Equity, speaks on "Markets Today" from SuperReturn International. David speaks to some of the concern around the rapid growth of private market investments and explains why it's important to look upon that growth in the context of overall public market caps.

With markets near all-time highs, stock valuations above average, and index concentrations at historic levels, we may be approaching a market transition in which high quality returns to favor.

What's the outlook for commodity markets and what factors are driving commodity trends?

Many of the companies that our International Equity team owns aren’t just resilient, but they develop products and services that help other companies build their resilience.

There is once again income in fixed income - and we would argue that the securitized markets offer some of the most attractive risk/reward opportunities in fixed income markets today.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

Stock market concentration has risen sharply over the past decade, creating a tough environment for active managers. In this report, we look at concentration over the past 75 years to see where we stand. We review which companies have been the largest and how that has changed. We ask if there is a correct level of concentration by studying other global markets and by presenting the possibility it was too low before. We then examine whether corporate performance supports the current increase.

Though we see sunny skies for credit, loans can act as an umbrella for portfolios if rainy days arrive, yet won't hurt your day at the beach if they don't.

Performance-focused bond investors should look beyond the superficial appeal of passive funds and consider where the superior returns have actually been delivered.

Poland, on the verge of bankruptcy when the Berlin Wall came down, has defied expectations to become a crucial manufacturing hub for western companies in Europe. Eric Carlson and Ravi Jain explore how the country became one of the most successful economies to emerge from the former Soviet bloc.

Rohanjit Chaudhry, Executive Director of Morgan Stanley Capital Partners, joined BDO Private Equity PErspectives podcast to discuss how private equity continues to approach economic challenges, like the current high cost of capital, through a lens of cautious optimism

This paper features a new MSIM study that shows how actively managed fixed-income funds have outperformed passive funds over the past 10 years.

Lauren Hochfelder, Co-Chief Executive Officer for Morgan Stanley Real Estate Investing, appears on Bloomberg Surveillance to discuss her outlook on commercial real estate and sectors where she sees potential opportunity.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

In a market obsessed with chasing the next big thing, we make sure that companies’ valuations look justified by the underlying fundamentals, building a portfolio of those rare companies with the ability to compound at a high and sustainable return over the long term. Because while multiples have accounted for 85% of returns this quarter, over 20 years this falls to 4%. Meanwhile, earnings growth counts for much more – as much as 71% over 20 years. Compounding requires discipline and patience.

When Milei took office in December 2023, the country was facing 300% inflation, and he quickly enacted severe measures such as devaluing the peso and slashing government spending by 40%.

As we review risk reports, along with our typical meaningful contribution from security selection, the dominance of factors coming into play to impact performance is at a high. In our view, this trend is too notable to ignore.

A potential U.S. economic slowdown, election uncertainties, or challenges to an AI-dominated future could lead to downside risks for the Mag 7, particularly if all occur simultaneously. Emerging markets are a compelling asset class that can help diversify these risks.

In this updated report, read how Emerging Markets are driven by more than just China. Emerging Market Equities look attractive with higher growth, reduced debt, and lower inflation. Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group and Head of Macro & Thematic Research, Emerging Markets explains.

Lauren Hochfelder on Yahoo Finance: Morgan Stanley's Top Real Estate Investing 'Megatrends'

The shift in expectations for rate cuts was felt across the world as yields rose in both the developed and emerging markets. The Broad Markets Fixed Income Team explores the impact on investors.

In this piece originally published by in Private Debt Investor, David Miller, Morgan Stanley's global head of private credit and equity discusses his background working for the Troubled Asset Relief Program, and the future ahead for Morgan Stanley Investment Management's private credit platform.

In this paper, the Portfolio Solutions Group explains how they counter adverse impact to returns in this new regime through a new management approach with the goal of achieving stable target returns.

Everywhere in India there are anecdotal but important signs of growing aspirations.

As Chinese corporations navigate the complexities of post COVID growth, Beijing is actively encouraging companies to increase dividend payments and embrace share buybacks, as part of government measures to make the capital markets more resilient. The focus on investor-friendly initiatives provides an opportunity for another look at Chinese stocks.

Jim Caron, CIO of the Portfolio Solutions Group, shares his macro thematic views on key market drivers.

The finance ministers of Brazil and France have called for a tax on U.S. dollar billionaires of at least 2% of their wealth each year, hoping to shore up $250 billion to combat poverty, hunger and climate change.

Brian Buck, Executive Director Morgan Stanley Global Liquidity, discusses the latest messaging from the Federal Reserve about monetary policy, including interest rates, and the implications for short-term investors. Listen now.

The Eaton Vance Equity Global Team seeks to illustrate the merits of a "sustainable" equity investing approach.

All humans have behavioral biases, those blind spots that can impact decision-making. To address investment bias, the Eaton Vance Equity Global Team has integrated proprietary Portfolio Exercises into their investment process, a differentiator in the way they manage money and an important element of their success.

Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets; Portfolio Manager, Passport Equity, outlines her Ten Key Themes for 2024.

Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets; Portfolio Manager, Passport Equity, outlines her Key Themes for 2024.

The U.S. dollar has been the prominent global currency for more than 80 years, but its dominance is coming under pressure in the face of evolving geopolitical shifts and increasing twin deficits in the United States. Digital assets such as bitcoin, stablecoins in addition to the promise of Central Bank Digital Currencies (CBDCs), have potential to significantly alter the currency landscape. These innovations, while still in their nascent stages, hold opportunities to both erode and reinforce the dollar’s hegemony in global finance, Andrew Peel of Digital Asset Markets explains.

Explore the powers and perils of pattern recognition, which investors often credit. We define it, discuss when it works better, and offer ways to improve it.

Despite growth in EV sales, oil demand has continued to increase over the past decade. With increased supply discipline and very attractive shareholder returns, we see a compelling outlook for oil prices and energy equities, Jitania Kandhari and Amol Rajesh of the Emerging Markets Equity Team explain.

We study the sources of total shareholder return (TSR) and tie them to underlying economic principles. This is useful to assess the prospective returns of a stock and to create a framework for flagging value traps. The analysis reveals that few investors in the stocks of companies that pay dividends earned the TSR and refutes the common belief that dividends contribute to capital accumulation. This framework gives investors a checklist of drivers and the tools to assess them.

The life cycle captures the stages of a company’s existence, from birth to growth to maturation to decline. Knowing where a company is in its life cycle is helpful for assessing capital allocation, financing costs, governance, and valuation. In this report, we use the cash flow statement to place companies in the proper stage. We then show the average characteristics of companies in each stage, their rates of transition between stages, and the past shareholder returns of each transition cohort.

While U.S. residential market dynamics are favorable with strong employment and low loan delinquencies, real estate in other developed economies faces vulnerabilities. China’s struggling property market remains a drag on its economy, but in many other emerging economies increased affordability, shifts in global trade and limited supply will create opportunities explains Jitania Kandhari, Head of Macro & Thematic Research, Emerging Markets Equity Team.

While society may be driven by immediate rewards, the International Equity team would argue that patience in investing leads to enduring results and positive long-term investment outcomes.

Counterpoint Global looks back across almost two decades of dedicated research on disruption—and the ways it reinforces our long-term mindset, helps us manage risk and reduce errors of omission. Diving into studies of digital advertising, cloud computing and the approaching wave of AI, the team reviews both how we approach disruptive change research and how that research has benefited Counterpoint Global in capitalizing on unique investment opportunities.

Nigeria's new reform minded president looks to accelerate economic growth for Africa's largest economy, leading to investment opportunities targeting the rising consumer.

As artificial intelligence enters its next chapter, the early winners of the “AI gold rush” have been the semiconductor and cloud computing providers. But the surge in generative AI also included two surprises: the speed of consumer adoption and the lack of barriers to entry. While the full impact of AI remains unclear, the International Equity Team continues to invest through its high-quality lens, focusing on further opportunities in cost reduction and value creation, and with an eye on risks.

We examine the demographics of public companies and their patterns of wealth creation. We focus on the last half century in the U.S. and review the “births” and “deaths” of public companies. We also discuss changes in market composition. Nearly 60 percent of companies have failed to create value, and 2 percent have created 90 percent of the aggregate wealth. This suggests two strategies for portfolio construction: seek broad diversification or aim to own the wealth creators.

In the world of M&A, not all acquirers are equal. The International Equity Team is cautious of M&A, typically a high-risk choice for a company’s capital allocation. But there are companies out there—some of which they own—with a track record of relatively low-risk acquisitions that add meaningfully to shareholder returns. Good acquirers are a rare breed, but there are common characteristics to their strategies that suggest it is a repeatable process.

Appetite for opportunities in private debt investing has been on the rise. In this dialogue, members of Morgan Stanley Investment Management’s Private Credit leadership team, Jeff Levin and Mark Jochims, offer their perspective on the market.

This report extends our analysis of the ROICs for public companies in the U.S. and updates the data to cover the years 1990 to 2022. We start by providing the latest ROIC figures, then examine the link between changes in ROICs and total shareholder returns (TSRs), and finish by reviewing elements of competitive strategy as well as persistence of ROIC by sector.

Leverage Morgan Stanley Investment Management’s experience and insight to demystify the private equity opportunity in Asia and opportunities for outperformance.

Post-pandemic, untangling global supply chains through reshoring, friend-shoring and nearshoring has created opportunities for emerging markets like India, Vietnam, Thailand, Indonesia and Mexico. Jitania Kandhari and Saumya Jain of the Emerging Markets Equity Team explain.

Jitania Kandhari, Deputy CIO, Solutions & Multi Asset Group; Head of Macro & Thematic Research, Emerging Markets; Portfolio Manager, AIA, outlines her Key Themes for 2023.

In this piece, Vikram Raju, Head of Climate Investing for Morgan Stanley Private Credit and Equity, discusses key trends in carbon impact for 2023 and beyond. limited partners can access the attractive return profile offered by the space.

Capital allocation is a key job of management, but not all know how to allocate effectively. In this report, we establish the foundation by reviewing the sources and uses of capital and then show how U.S. companies have allocated capital since 1985. Next, we review the alternatives in detail, including intangible investments, and offer a guide for thinking about the prospects for value creation. We finish with a framework for assessing a company’s capital allocation skills.

Mining companies have had a terrible environmental reputation in the past, but recent efforts show how the industry can implement sustainable initiatives. Investors are now focusing on companies that have practical decarbonization pathways to help lower emissions over the next three to five years. Eric Carlson and Candy Chao explore.

We extend the analysis from our recent report, “Return on Invested Capital,” by adjusting ROIC for all companies to reflect intangible investment. While the median and aggregate ROIC for the adjusted figures is similar to the traditional one, the main result is that extremely high and low ROICs regress toward the mean. We believe these adjustments represent a step toward a more accurate view of the magnitude and return on investment.

Vietnam’s large, young and tech-savvy middle class, makes it one of a few countries to benefit from globalizing in a deglobalizing world and usher in the next generation of investments in emerging markets. Steve Quattry and Jorge Chirino explain.

We discuss how to calculate return on invested capital (ROIC) and show how it is connected to free cash flow, economic profit, and growth. We work through the challenges in estimating it, present empirical data, review how adjusting for intangible investments can reshape the figures, and include a case study.

We examine whether a study of market share and related concepts can help us determine if a company has a sustainable competitive advantage. This takes us on a journey that includes life cycles, market share, concentration, markups, intangibles, and "superstars". We study the link between some of these variables and return on investment and provide some analytical tools along the way. We finish with some case studies to see how these ideas apply to a handful of industries.

"China’s spectacular economic growth has remade the geopolitical landscape and created tensions with the U.S. But the country’s internal and external challenges will limit Beijing’s ambitions. Investors will be on the edge," explains Jitania Kandhari, Head of Macro and Thematic Research for Emerging Markets Equity Team.

In India, there has been a recent change from the Gandhian principles of small is beautiful to actively incentivizing large scale manufacturing. Coupled with a healthy banking sector and high demand for housing, the stage is set for Delhi to move forward with an opportunity to shine.

Psychedelics have the potential to fundamentally reshape how we think about and treat not only mental illness but a host of other conditions as well. Counterpoint Global investigates how psychedelic therapy works, the potential wide-spread impact of this innovative treatment, and the roadblocks to medical adoption.

Investors must look past simple measures of profits to understand a business’s true ability to create value. The rise of intangibles means more investments are expensed versus capitalized, which makes financial statements appear distorted versus those of the past. Academics distinguish between GAAP losers, companies that have losses but a high return on investment, and real losers, or those that have expenses unrelated to investment that exceed sales. Evidence from recent decades shows GAAP losers produced attractive shareholder returns relative to the real losers and profitable companies.

Blockchain technologies have unique capabilities that can enable an interoperable marketplace for voluntary carbon offsets – solving a number of issues with the existing market, such as significant variance in underlying quality of offsets – and thus have an opportunity to play a role in decarbonizing the global economy.

Saudi Arabia is in the midst of an ambitious and transformative program of social and economic reforms designed to wean the economy off its dependence on the oil sector. Najmul Hasnain, Head of the Saudi Arabia Equity Team, explores.

Burgeoning industries often follow the same developmental pattern as a child’s brain, with an overproduction of options followed by a pruning of those that are not useful. This appears wasteful but is in fact an elegant solution. We discuss this pattern for companies, describe why investors should care, and offer some current examples of where this pattern of entry and exit is playing out.

Climate concerns and geopolitical events will revive policy makers support for nuclear power: a safe, reliable and carbon-free source of energy. Steven Quattry, Candy Chao and Jorge Chirinos of the Emerging Markets Equity team explain.

The goal of capital allocation is to put resources to their best use to create long-term value per share for ongoing shareholders. The first major part of capital allocation is investing in the business. The second is transacting with mispriced securities, which introduces the potential for wealth transfers between stakeholders. Astute investors appropriately focus on a management's ability to make investments in the business, but they should also pay attention to management actions with regard to buying and selling the company’s stock.

Company culture is essential to unleashing the ingenuity that drives intangible investments, yet it continues to defy quantification. Counterpoint Global identified employee retention as a significant indicator of culture. They show how it correlates with attractive stock returns and how this analysis is integrated into their Sustainability Research process.

The shift from tangible to intangible investments has complicated the ability to interpret financial statements. One solution is to record intangible investments on the balance sheet and then amortize them over their useful lives. These adjustments recast profitability for some companies and are inconsequential for others. Overall, we estimate that earnings for the S&P 500 would be about 10 percent higher with these changes. This suggests great caution in comparing earnings or valuation multiples over time.

Accounting has not kept pace with the changing economics of businesses, which has created a huge gap between what companies report in their financial statements and what an investor needs to understand a business. To better categorize activities, we suggest making adjustments within the statement of cash flows pertaining to stock-based compensation, leases, and intangible investments. We believe these adjustments substantially improve the description of a business. We share a case study of Amazon for 2020 to make the concepts more concrete.

Sustainability Research at Counterpoint Global has produced a method to systematically measure the potential cost of carbon emissions as well as the financial impact of a carbon tax. Our framework allows us to translate these costs into estimates of stock returns. We believe that measuring the cost of carbon emissions allows us to better understand the environmental risks for the companies in our portfolio as well as for those we do not own. We also seek to help our clients benefit from the many opportunities that a low-emissions world could create.

This report examines the barriers to change for organizations. We use sports as the prime example but then apply the lessons to investment management. Organizations can be slow to adopt certain approaches even when they add value due to loss aversion, a preference for the status quo, and the fear of poor outcomes in the short run. Organizations may overcome these challenges by aligning behind a commitment to improvement, learning, transparency, and accountability. Good long-term results require developing and executing strategies that add value.

In a world of daily financial chatter, it’s easy to get distracted from what drives the core of long-term returns; the power of compounding. William Lock and Alistair Corden-Lloyd explain.

We suggest the mantra “everything is a DCF model.” Whenever investors value a stake in a cash-generating asset, they should recognize they are using a discounted cash flow (DCF) model. The topic deserves attention because many market participants don’t think DCF models are relevant, and many use heuristics for value without recognizing the purpose and limitations of the shorthands. The intrinsic value, determined by the present value of future cash flows, attracts the price like a magnetic force. This means it is useful for investors to keep in mind the value drivers of a discounted cash flow model.

The shift in investments from tangible to intangible assets has important implications for how investors should think about corporate growth rates. Companies with more intangible assets can grow faster, but they can also become irrelevant and shrink faster. Our analysis of historical sales growth rates for U.S. companies reveals both of these results: higher growth and more dispersion, on average, for companies and industries with the highest intangible asset intensity. Skillful investors may be able to identify the companies that will grow faster than expected, hence providing the potential for attractive returns.

This report focuses on the customer as the basic unit of analysis in understanding value. The idea of customer lifetime value has been around for decades, but we believe our discussion is richer and more nuanced than what many companies and analysts present. We discuss a framework called customer-based corporate valuation, which links customer economics to shareholder value and offers a more robust way to forecast revenues. We also show the limitations of common ratios such as customer lifetime value to customer acquisition cost (LTV/CAC), explore how companies can create consumer and supplier surplus, provide a case study, examine trade-offs in the drivers of value, and explore common errors.

This report describes market-expected return on investment (MEROI), which measures the return at which the present value of a company’s profits equals the present value of its investments. This allows executives and investors to see how high the bar is set. Measuring returns has become harder as investments have shifted from being mostly tangible to intangible. We gain a clearer view of returns and expectations by separating expenses and investments properly. We break new ground by connecting valuation and accounting.

The weighted average cost of capital (WACC) and volatility (vol) generally move in lockstep, but 2020 is unusual because the cost of capital is well below its historical average and volatility is well above its historical average. The prime beneficiaries of these patterns are companies rich with real options. In this report, we define real options, discuss what businesses are likely to have them, review the valuation implications, and finish with a way to use real options analysis with traditional valuation.

The one job of an equity investor is to take advantage of gaps between expectations and fundamentals, which requires an understanding of the magnitude of investment and return on investment in order to properly anticipate free cash flows. With investments shifting more toward intangible assets, this report discusses the measurement and characteristics of intangible assets and reviews the implications of the growth of intangibles for investors.

Over the past quarter century there has been a marked shift in U.S. equities from public markets to private markets controlled by buyout and venture capital firms. This change has had reverberations for asset managers, investors, executives, and policy makers.

We show how corporate valuations change as we vary assumptions about growth, return on incremental invested capital, and the discount rate.

Counterpoint Global discusses how Sustainability Research is additive to their existing investment process and converges the pursuit of profits and purpose.

We address four myths or popular delusions in the investment industry.

An investor’s success requires both skill and opportunity. We look at how investors can express skill and use dispersion to measure the opportunity set.