All Country World ex US Equity Allocation Strategy
All Country World ex US Equity Allocation Strategy

All Country World ex US Equity Allocation Strategy

 
 
 
Summary

The All Country World ex US Strategy seeks long-term capital appreciation by investing primarily in equity securities of non-U.S. issuers. This actively managed strategy consists of international and emerging markets equities and utilizes a top-down approach to exploit inefficiencies among and across regions, countries, sectors and industries to achieve its objective. The Investment Team adds value by overweighting regions, countries, sectors and industries that have positive dynamics, unrecognized value and supportive technical factors.

2005
Strategy Inception
0-20%
Emerging Markets
0-3%
Cash
 
 
Investment Approach
Philosophy

The investment team believes that the key determination of successful investment in international equity markets is the choice of region, country and sector/ industry. Thus the team analyzes regions, countries and sectors rather than thousands of individual securities. It believes that macro investment factors can be just as potent as bottom-up investment factors. Though bottom-up investing can be attractive, the team believes that corporate managements and stocks will be impacted by economic growth, fiscal and monetary policy decision-makers and overall moves in investor sentiment. This strategy offers clients a diversified way of investing and a diversified portfolio.

 
Differentiators
A diversified portfolio

Complementing the more widely available bottom-up core investment capabilities, the AIA team has a top-down approach that informs clients of  important drivers of economies and markets. The AIA team strives to build portfolios that are well-diversified with limited stock-specific risk.

Long tenure of product and investment team

Lead Portfolio Manager, Ann Thivierge, has been managing the AIA strategy since 1995, and joined Morgan Stanley in 1986.

Continuously evolving quantitative and qualitative analyses

The team continues to expand the array of quantitative indicators they analyze across regions, countries, sectors and industries. These indicators provide insight into marginal changes in the team’s three factors for an investment decision: fundamentals, valuations, and sentiment.

 
 
 
Investment Process
1
Fundamental Change

The catalyst for market performance can be marginal changes in economic, corporate and political environments. The team gains market insight by visiting countries, meeting with central bankers, government officials, strategists, and economists, and analyzing both internal and external research to form investment opinions. In particular, the team searches for incremental shifts in policy or the operating environment, which they believe will impact profitability.

2
Valuations

Valuations are the core of the team’s decision-making process as the team invests in undervalued countries and sectors. The team analyzes and monitors relative and absolute valuation relative to long-term historical data across asset classes, regions, countries and sectors. The team then ranks the markets and sectors/industries on relative attractiveness and consistently examines ranking changes.

3
Sentiment

Overall market sentiment of particular countries and sectors/industries can be an important indicator of risk and return. The team consistently monitors global investor sentiment indicators, global fund manager asset allocation and equity positioning, and cross- and intra-asset global portfolio flows.

4
Portfolio Implementation

To implement investment decisions, the team builds baskets of stocks selected by a risk model, which does not factor in bottom-up analysis of names and is designed to broadly track country or sector/industry performance. The team invests in a diversified selection of stocks in the country, sector or industry.

 
 
Portfolio Managers
Executive Director
12 years industry experience
Managing Director
22 years industry experience
Managing Director
18 years industry experience
 
 
 
 

RISK CONSIDERATIONS  

Diversification does not protect an investor against a loss in a particular market; however it allows an investor to spread that risk across various asset classes.

Past performance is not a guarantee of future performance. There can be no assurance that the Strategy will achieve its investment objectives. Portfolios are subject to market risk, which is the possibility that the value of the investments and the income from them can go down as well as up and an investor may not get back the amount invested. Accordingly, you can lose money investing in this strategy. Please be aware that this strategy may be subject to certain additional risks. In general, equity securities’ values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of investing in emerging market countries are greater than the risks generally associated with investments in foreign developed countries. Derivative instruments can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on the Portfolio’s performance. Illiquid securities may be more difficult to sell and value than public traded securities (liquidity risk). The use of futures includes the possible imperfect correlation between the price of futures contracts and movements in the prices of the securities being hedged, and the possible absence of a liquid secondary market for any particular investment.

 

From June 2003 to March 31, 2017, the strategy was managed by Ann Thivierge. From March 31, 2017 to June 30, 2017 the strategy was co-managed by Ann Thivierge, Munib Madni, Jitania Kandhari, and Ben Rozin.

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Past performance is no guarantee of future results.

A separately managed account may not be suitable for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Any views and opinions provided are those of the portfolio management team and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

All information provided has been prepared solely for information purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

OTHER CONSIDERATIONS

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

The MSCI All Country World Ex-U.S. Indexis a free float-adjusted market capitalization weighted index designed to measure the equity market performance of developed and emerging markets, excluding the U.S. The term "free float" represents the portion of shares outstanding that are deemed to be available for purchase in the public equity markets by investors. The performance of the Index is listed in U.S. dollars and assumes reinvestment of net dividends. The index is unmanaged and should not be considered an investment. It is not possible to invest directly in an index.

The information presented represents how the portfolio management team generally implements its investment process under normal market conditions.

The weights provided represent typical ranges and are not a maximum number. The portfolio may exceed these from time to time due to market conditions and outstanding trades.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.  

 

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