CLIENT LOGIN
-
-
CIO INSIGHTS
-
BACK TO CIO INSIGHTS
BACK TO ARTICLES & INSIGHTS HOME
-
-
-
-
Investment Insights are written by Angeles' CIO Michael Rosen
Michael has more than 30 years experience as an institutional portfolio manager, investment strategist, trader and academic.
IT'S A BIG WORLD
Published: 11-03-2014With apologies to Walt Disney, the global economy is getting, well, more global, and, intuitively, companies’ sensitivities to global macro factors increase in proportion to their global revenues.
When we look at conventional, market-cap weighted indices, we (implicitly) assume that 100% of the each company’s stock price is driven by domestic factors. We know, obviously, that this makes no sense logically for companies that operate globally. For example, when we own Samsung implicitly ascribe 100% of that holding to our Korea exposure. But the company gets less than 10% of its revenue from Korea, and it’s fortunes are dependent on non-Korean factors more than domestic ones. This statement holds true for many multinational corporations.
The chart shows the capitalization weights of the MSCI ACWI versus the revenue exposures of the same ACWI companies. It’s interesting that the differences are almost entirely between the US and EM: Europe, UK, Japan show little change. But the US weight falls in half and the EM weight triples when view by revenue rather than by capitalization.
No benchmark is perfect, but I suspect that over time we will gravitate to evaluating holdings on factors other than solely market capitalization.
PRINT THIS ARTICLE
-
Balance 10-29-2019
October 1987 was a memorable month for me. It began with the 5.9 magnitude Whittier Narrows quake that rocked my ...
READ MORE -
Laboring 03-24-2016
In some respects, this is a golden age for labor. The unemployment rate has dropped to 4.9% from a high of 10% in ...
READ MORE -
Disconnect: How Can Markets Be At All-Time Highs When the World Around Us Is Collapsing? 08-18-2020
Answer: Markets reflect the dynamism and adaptability of private companies, not geopolitical events or socioeconomic ...
READ MORE
-
-
CONNECT WITH USSUBSCRIBE TO ANGELES' INSIGHTS
Get the latest investment information and stay on top of market trends.
-
CONTACT US
SANTA MONICA
429 SANTA MONICA BLVD
SUITE 650
SANTA MONICA, CA 90401
310.393.6300
GET DIRECTIONS -
NEW YORK
375 PARK AVENUE
SUITE 2209
NEW YORK, NY 10152
212.451.9240
GET DIRECTIONS
