MSCI Launches AI Value Chain Indexes as Hedging Demand Grows

MSCI Inc. has rolled out a series of artificial intelligence value chain indexes to help investors hedge exposure to the sector more precisely, according to the financial data compiler.

Launched in late August, the 14 indexes cover global companies across the AI supply chain from physical and digital infrastructure to applications. They enable investors to assess exposure at the layer or component level, align positioning, and act quickly when a bottleneck emerges, an MSCI document on the products shows.

“AI tends to be kind of the headline, but there are a lot of components underneath the headline,” Jana Haines, MSCI’s head of index, said in an interview. “What we hear consistently from clients is that their challenge isn’t identifying AI exposure, it’s decomposing it.”

MSCI’s new indexes are coming at a time when the AI trade has become one of the biggest sources of stock market volatility, as investors flip between optimism about the revolutionary technology’s economic benefits and concern over the sector’s high spending. They also reflect the growing demand for more sophisticated hedging strategies as the industry undergoes rapid development and transformation.

“Investors now often demand a very specific type of exposure, whether it’s a sector, whether it’s a size segment, whether it’s a specific country exposure,” Haines said. “And they want to be able to slice and dice the exposure precisely to fit their portfolio.”

The AI value chain indexes give investors modular, rules-based building blocks so they can dial exposure up or down layer by layer, rather than treating AI as one undifferentiated bet they can’t unwind selectively, she said.

Separately, the index compiler has officially launched as many as 100 new futures and options contracts linked to MSCI’s indexes under a deal struck with Singapore Exchange Ltd. in July. The products cover both developed and emerging markets, as well as major sector indexes including utilities, industrials, energy and financials.

The pact builds on SGX’s work with MSCI, six years after the index provider chose to move licensing for derivatives products on a host of gauges to Hong Kong from Singapore. It is also part of the Singapore bourse’s broader push into derivative products, including Japanese government bond futures and cryptocurrency perpetual futures.

“We would like to bring liquidity into some of these benchmarks, particularly in the Asian time zone,” said Janice Kan, SGX’s head of derivatives. “A lot of the global portfolios today, their Asian exposures are already traded or hedged on SGX.”