A pioneer for women in the financial world, Nilly Sikorsky played a significant role in shaping celebrated investment tools.
The Morgan Stanley Capital International (MSCI) indices are among the most recognisable names in the investment world, and Sikorsky was integral to their creation. They were conceived as an internal tool to support Capital International’s pioneering global investing approach, and are still used throughout the industry today.
Founded in 1931, the Capital Group established a presence in Europe in the early 1960s. A founding associate of the Geneva office, Nilly Sikorsky, became a central figure in the growth of Capital’s investment services around the globe. Over 48 years, she served in many leadership roles and had a tremendously positive impact on the organisation both as an investment professional and as a role model.
In this excerpt from an essay published just prior to her retirement in 2010, Nilly looked back at the early days of global investing - and the origin of what would become the Morgan Stanley Capital International indices.
Here are her words :
“As I reflect on my years in the investment management business, there is one theme that is as true today as it was when I started in the investment business in 1962: The economies of the world are integrating. The implications are that investors would become global investors, and companies would have to be viewed from a global, not just national, perspective. This was a relatively new concept then. And it is because of this belief that we created the Capital International Worlds Indices, or what have become known today as the MSCI indices. This philosophy of global investing continues to drive our focus on investing in companies with a global perspective.
A Need for Worldwide Sector Indices
When we first started managing global equities in the 1960s, we had non way of substantiating our vision or measuring where we added value. To prove our thesis that it would be more important to compare industries on a global basis rather than within a particular country, we needed worldwide sector indices. We created the EAFE (Europe, Australasia, Far East) index initially as an in-house resource, but eventually made it available to the public. It was a laborious process of finding and organising company data that has not otherwise been organised before.
At that time, many local markets were relatively small and highly specialised in areas like banks, utilities or autos. It was common to find many sectors not represented in a local market, or to have only one national champion. If you look at it today, the concept is not very different. Many markets around the world do not offer enough diversification for investors. So, for example, we felt it would be more important on a long term basis to compare Fiat to Peugeot than it was to compare Fiat to another Italian company. We found that you need a global vision to understand how the various sectors would function.
Investing with a Global Perspective
Today it’s clear to me that the integration of the global economy continues. The first phase is over within the developed world; we are now in phase two, in which the emerging market countries are integrating with us. As such, the philosophy of looking at companies in a global context is even more applicable today than it was when we created the EAFE index. This philosophy is one of the cornerstones of our global research effort. It’s about bottom-up stock picking and investing in companies with a global perspective.
When I say we do things bottom up, I really do mean bottom up. While we do consider macroeconomics conditions, we don’t employ strategists or make committee-based decisions on countries or regions. By striving to select the best companies, geographic diversification occurs naturally. Essentially, it’s about striving to invest in the best companies around the world with a global perspective.
The Benefits of Global Flexibility
In a US equity mandate, a portfolio manager who seeks to invest in telecommunications could not invest in Telefónica (Spain) or América Móvil (Mexico). An investor in Latin American equities could not invest in AT&T (US) or NTT (Japan). However, a portfolio manager of global equities can invest in companies with long-term growth potential at attractive prices, regardless of their location.”