On Top of the World

A Smarter Way to Benchmark International Indices

For Financial Professional Use Only

The long-standing dominance of the U.S. equity market may be coming to an end. Year-to-date, the MSCI Emerging Market Index has significantly outpaced the S&P 500, with the ETF EEM delivering a 25% gain versus half that from the S&P. Even compared to the Mag-7, emerging markets are winning—without the burden of extreme valuations. For advisers, this shift raises an important question: how can you help clients capture global equity growth opportunities, while properly measuring and managing the additional volatility these markets bring? That’s where Pave Software comes in.

History shows that when capital flows shift, they do so for the long haul. After the dot-com bust in 2000, emerging markets outperformed the U.S. for nearly a decade before America’s long run of inflows began. Today, we may be on the verge of another such structural rotation—one that could define global portfolios for years to come. To help advisers prepare, Pave now provides the ability to benchmark international indices directly within the Strategy window. Under the Benchmark dropdown, you can select from the following:

• MSCI Japan Index
• MSCI Emerging Markets Index
• MSCI EMU Index
• MSCI EAFE Index
• MSCI ACWI Index

These benchmarks are the global industry standard, with over $17 trillion in assets tied to MSCI indices.

Focusing on the Emerging Markets benchmark highlights why this matters right now. The MSCI Emerging Markets Index captures stocks from 24 economies—ranging from manufacturing powerhouses like South Korea and China to commodity leaders like Brazil and Mexico. This provides: 

• Cyclical growth potential from export-driven economies, 
• Diversification benefits from currency exposure,
• Liquidity tailwinds, as falling dollar values support debt issuance, attract fixed income flows, and reinforce equity markets. 

Pave simplifies execution by purchasing American Depository Receipts (ADRs) of these companies, while preserving the global diversification benefits of the index.

In other words, global benchmarks help you meet client demand for international exposure while staying disciplined in portfolio construction. With Pave, you can measure and manage the added volatility of non-U.S. equities—turning potential risks into well-calibrated opportunities. This note focuses on the MSCI Emerging Markets Index, and in future updates, we’ll highlight the unique benefits of Japan, EMU, EAFE, and ACWI benchmarks.

To learn more, please reach out by emailing sales@pavefinance.com or use the “book demo” link below. We look forward to speaking with you.

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