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Room for One More: Reflecting the New Real Estate Sector in Parametric Emerging Markets and International Strategies

In late 2014, MSCI and S&P Dow Jones announced the creation of a new real estate sector, to be split out of the financial sector, under the Global Industry Classification System (GICS). This eleventh GICS sector was incepted following the close of markets on August 31, 2016, and is comprised of equity REITS as well as real estate management and development companies. Given the sector allocation process in Parametric’s Emerging Markets and International strategies is based on the GICS sectors, the Investment Committees of both strategies studied the implications of these changes. The research performed on historical simulations using model portfolios showed that the addition of an eleventh GICS sector had minimal impact on the risk/return metrics of both strategies. As such, the sector process in both strategies will reflect the new GICS sector definition.
 
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Tim Atwill
Tim Atwill, Ph.D., CFA

Head of Investment Strategy

 

 

Tim Atwill
Tim Atwill, Ph.D., CFA
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