MSCI Barra plans to undertake its biggest expansion of the MSCI All-Country World index, including all investible large-cap and midcap stocks worldwide in the index next year, according to a news release. In addition, MSCI Barra also plans to offer large-cap and midcap subindexes for the ACWI for the first time.
The firm will also expand its global small-cap index, a separate index series from ACWI, to include all investible stocks below the midcap segment and add all such investible stocks in all emerging markets — the existing small-cap index now covers only developed markets. It also plans offer growth and value subindexes, broken out from its small-cap index for the first time.
MSCI Barra will also introduce a "combined investible market index," combining the expanded ACWI and expanded small-cap index. "We don't have a name for that yet," Arun Kumar, executive director, MCSI Barra, said in an interview.
ACWI currently covers 85% of the market cap of both developed and emerging markets, comprising 2,771 large-cap and midcap stocks with a combined market cap of $27.5 trillion, Mr. Kumar said. The small-cap index currently covers 40% of the market cap for developed markets only, comprising 2,116 stocks with a combined market cap of $1.3 trillion. MSCI Barra defines small-cap stocks as having a market cap between $200 million and $1.5 billion, although that definition will change when the new methodology is developed, he said.
MSCI Barra plans to make details of the expansion public by Nov. 17 and begin consulting with market participants on developing a transition process to the expanded methodology from the existing indexes. It plans to announce the finalized expanded methodology and the details of the transition process by March 31.