MSCI has extended its series of Economic Exposure Indices with the launch of 13 new indices measuring the performance of publicly listed companies with revenue exposures to an expanded range of target regions and countries.

MSCI has expanded its line-up of Economic Exposure Indices.

First launched in March 2012, the series initially included a range of developed market (World, EAFE, USA, Europe and World ex-Israel) securities with high revenue exposures to emerging markets.

This has now been expanded to include not only emerging markets but also Africa, China and Latin America. The MSCI World with China Exposure Index, for example, focuses on developed market companies with high revenue exposure to China. Similarly, the MSCI EAFE with Africa Exposure Index focuses on international developed markets companies with high revenue exposure to Africa.

MSCI was the first index provider to offer indices that identified the diverse geographic revenue streams of companies. Following MSCI’s launch, rival index providers have rolled out similar index concepts, such as Russell Indexes’ GeoExposure suite and Stoxx’s ‘EM Exposed’ range.

The index concept is grounded in common sense. Many companies today conduct business globally and are exposed to the economies of multiple countries and regions. Often, the country of domicile and domestic listing is of little relevance. Nestlé, for example, is a Swiss-domiciled company with only 2.15% of its revenues derived from Switzerland. Nestlé’s economic exposure to emerging markets countries, on the other hand, is a far more significant 35% of its revenues.

According to Baer Pettit, Managing Director and Head of the MSCI Index Business: “Globalisation and the rapid integration of markets have challenged us to explore alternative approaches to categorising the global equity universe. Economic exposure brings a new dimension to the construction of global equity indices.”