Morgan Stanley Institutional Fund Inc. - Emerging Markets Leaders Portfolio Class R6 · NASDAQ:MELSX
Morgan Stanley Institutional Fund Inc. - Emerging Markets Leaders Portfolio Class R6 — Morgan Stanley Investment Management — Investor Presentation (June 2025)
58 slides from Morgan Stanley Institutional Fund Inc. - Emerging Markets Leaders Portfolio Class R6's investor presentation, June 2025
Slide 1: The BEAT: Monthly Global Market and Asset Allocation Guide
The BEAT Bonds | Equities | Alternatives | Transition Monthly Global Market and Asset Allocation Guide June 2025 The BEAT | June 2025
Slide 2: About The BEAT and section guide
The BEAT, previously known as the Monthly Market Monitor, provides connectivity between TOP IDEAS changing market events and implications for investor portfolios. 3 Spanning Bonds, Equities, Alternatives and Transition *, this monthly review provides timely information across a broad array of market
Slide 3: Key Themes for June 2025
TOP IDEAS Key Themes for June 2025 Steeper Yield Curves Implications for long duration. The potential change in the Fed’s A New Fed Policy Framework framework increases the possibility of a steeper curve and Shortfalls vs. Deviations. Chairman Powell remarked at a Fed underperformance of long durati
Slide 4: The Portfolio Solutions Group – Our Top Ideas
TOP IDEAS The Portfolio Solutions Group – Our Top 4 Ideas Rebalancing Equity Exposure Considering U.S. Loans Exposure The new deals. We see the trade deal struck between the U.S. and UK as Managing duration risk. We prefer bank loans over traditional U.S. HY with the first domino to fall in other su
Slide 5: While Soft Data Continues to Disappoint, Hard Data Remains Resilient
TOP THEMES While Soft Data Continues to Disappoint, Hard Data Remains Resilient Record levels of policy uncertainty have cast some doubt over the prospects for economic growth. Thus far, this uncertainty has resulted in negative trends for many of the so-called soft data measures (sentiment surveys,
Slide 6: Have We Reached Peak Tariff De-escalation?
TOP THEMES With Recent Developments, Have We Reached Peak Tariff De-escalation? With the May 12th temporary pause/reduction of tariffs on China, the overall average effective tariff rate (as estimated by the Yale Budget Lab) fell by just over 10%, down to 17.8% on a pre-substitution basis. With the
Slide 7: Markets Have Exhibited “Risk-On” Trends
TOP THEMES With De-escalation in Focus, Markets Have Exhibited “Risk-On” Trends Since the reciprocal tariffs delay announced on April 9th, equity market internals have signaled “risk-on” trends across several perspectives: On average, Cyclicals (ex energy) have outperformed Defensives, the high-vola
Slide 8: Payroll Gains Driven by the Public Sector
TOP THEMES Over the Past Three Years, Payroll Gains Have Been Driven by the Public Sector Over recent years, the majority of payroll job gains have been in the public sector (government, education, health services), resulting in a crowding out of private sector employment. It remains to be seen whet
Slide 9: Mapping the Total Fiscal Impulse from Reconciliation
TOP THEMES Mapping the Total Fiscal Impulse from Reconciliation While the budget process still has a long way to go, the bill emerging from the House reconciliation process suggests more near-term fiscal tailwinds than had been expected. The core focus remains extending tax cuts set to expire at the
Slide 10: Global Bond Yields Are on the Rise
TOP THEMES Global Bond Yields Are on the Rise – Not Unique to the U.S. Long duration assets are being repriced globally, not just in the U.S. In fact, U.S. long-dated bond yields have risen less than in other major regions thus far in 2025. Japanese Bond Yields Have Risen to Historic Levels U.S. Bon
Slide 11: Municipals: Higher Yields and a Steeper Curve
TOP THEMES Municipals: Higher Yields and a Steeper Curve Longer-dated yields in the municipal market moved higher in May, a continuation of the YTD trend. In the face of heavy supply in recent months, the muni curve has (bear) steepened, to a greater degree than U.S. Treasuries (USTs), resulting in
Slide 12: Overweight European High Yield Credit
TOP IDEAS Overweight European High Yield Credit The reduction in global growth risks from the recent positive trade negotiation outcomes should reduce default risks, making lower-quality credit more attractive. European HY credit appears attractive especially for USD-based investors, given an additi
Slide 13: Overweight Indian Equities
TOP IDEAS Overweight Indian Equities India muddled through two quarters of an economic and corporate earnings growth slowdown since Q4 2024, driven by tight domestic fiscal and monetary policy. The first signs of the cycle bottoming have emerged after the RBI shifted to an accommodative policy stanc
Slide 14: Floating-Rate Loans
TOP IDEAS Considering Loans Exposure: Managing Duration Risk While loan spreads have tightened over recent weeks, we like the additional reduction in rate sensitivity that comes from bank loans, especially given the Fed’s potential changes to their policy framework. Additionally, loans show low corr
Slide 15: Real Estate Fundamentals Continue to Improve
TOP IDEAS Real Estate Fundamentals Continue to Improve Real estate has been experiencing a repricing over the last few years in response to higher interest rates, cyclical oversupply and, in certain sectors, secular demand destruction. That said, the long-term operating outlook is markedly improving
Slide 16: Capital Markets Investment Framework
TOP IDEAS Capital Markets Investment Framework Current allocation Change from previous – – High conviction underweight – Underweight Representative Allocations from the Portfolio Solutions Group = Neutral + Overweight ++ High conviction overweight Asset Allocation Our View Commentary –– – = + ++ Bon
Slide 17: Global Fixed Income
TOP IDEAS Global Fixed Income Current allocation Change from previous – – High conviction underweight – Underweight Representative Positioning from Portfolio Solutions Group = Neutral + Overweight ++ High conviction overweight Fixed Income Our View Commentary –– – = + ++ Bonds At ~4.50%, the 10-year
Slide 18: Global Equity
TOP IDEAS Global Equity Current allocation Change from previous – – High conviction underweight – Underweight Representative Positioning from Portfolio Solutions Group = Neutral + Overweight ++ High conviction overweight Equity Our View Commentary –– – = + ++ Regional United States: While de-escalat
Slide 19: Alternatives
TOP IDEAS Alternatives Representative Positioning from Portfolio Solutions Group Alternative Assets Commentary Private Markets Private equity investors have been experiencing constrained distribution activity since 2022 when the shift in the interest rate regime triggered adjustments across capital
Slide 20: Sovereign Bond Yields
BONDS Sovereign Bond Yields Developed Markets Emerging Markets (10 yr. Yield) (10 yr. Yield) 16% 16% 1 Mo. Ago 1 Mo. Ago 12 Mo. Ago 12 Mo. Ago 12% 12% 8% 8% 4% 4% Apr ’25 Apr ’25 0% 0% Past performance is no guarantee of future results. It is not possible to invest directly in an index. Source: Fact
Slide 21: Key Rates (%)
BONDS Key Rates (%) Security Current 12-Mo. Ago Average Minimum Maximum 1-Week SIFMA 2.78 3.77 3.20 1.86 4.21 Secured Overnight Financing Rate 4.41 5.34 4.83 4.27 5.40 1-Mo SOFR 4.32 5.32 4.79 4.29 5.35 3-Mo SOFR 4.27 5.33 4.72 4.21 5.35 2-Yr Treasury 3.59 5.03 4.20 3.54 4.97 5-Yr Treasury 3.72 4.71
Slide 22: Monetary Policy
BONDS Monetary Policy Central Bank Policy Rates Market Expectations for Future Central Bank Rates Current 1-Mo. Ago 12-Mo. Ago 5.0% U.S. Federal Reserve 4.50% 4.50% 5.50% 10% 4.49% BOE BOE 4.50% 4.50% 5.25% U.S. Federal Reserve 4.23% 9% 4.15% 3.95% BOJ 0.50% 0.50% 0.10% 4.0% 4.29% 4.0% BOE 3.80% 3.7
Slide 23: U.S. Treasury Yields
BONDS U.S. Treasury Yields U.S. Treasury Yield Curves Yields & Performance 7% Yield (%) Total Return (%) Security 1-Mo. 12-Mo. 6% Current 1-Mo. 12-Mo. Ago Ago 5% 3-mo. Treasury 4.29 4.29 5.38 0.34 4.88 12-Mo. Ago Apr ‘25 1-Mo. Ago 6-mo. Treasury 4.17 4.22 5.37 0.34 5.06 4% 2-yr. Treasury 3.59 3.89 5
Slide 24: Characteristics and Performance Analysis
BONDS Characteristics and Performance Analysis Averages Total Returns (%) Coupon Price Yield to Spread Maturity Duration Index (%) ($) Worst (%) (bps) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y U.S. High Grade Bloomberg U.S. Aggregate Index 3.52 92.4 4.51 40 8.4 6.1 0.39 2.64 3.18 8.02 1.95 -0.67 1.
Slide 25: Spread Analysis (bps)
BONDS Spread Analysis (bps) 1,600 1,400 1331 High 1,200 1087 Current Median 1,000 Low 800 721 600 492 373 480 471 400 325 394 395 260 368 363 366 200 127 132 171 261 259 106 117 131 40 43 74 52 97 83 44 35 0 74 29 22 54 7 -200 -88 Floating-Rate Emerging Aggregate MBS ABS CMBS Corporate Preferred Loa
Slide 26: Corporate Bond Market Update
BONDS Corporate Bond Market Update Averages Total Returns (%) Coupon Price Yield to Spread Maturity Duration (%) ($) Worst (%) (bps) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y U.S. High Grade Bloomberg U.S. Corp. Investment Grade Index 4.36 92.8 5.14 106 10.4 6.8 -0.03 1.71 2.27 7.60 3.04 0.47 2.50
Slide 27: Corporate Bond Market Update
BONDS Corporate Bond Market Update Average Spread (bps) Current 1-Mo. Ago 12-Mo. Ago Median 1,200 HY Corporate 394 355 318 393 1,000 Loans 480 461 465 465 800 IG Corporate 106 94 87 116 Loans 600 400 High Yield Corporate 200 0 Investment Grade Corporate Annual Default Rate 8% Current 1-Mo. Ago 12-Mo
Slide 28: Municipal Bond Market Update
BONDS Municipal Bond Market Update Averages Total Returns (%) Coupon Price Yield To Maturity Duration (%) ($) Worst (%) (yrs.) (yrs.) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y Bloomberg Municipal Bond Index 4.61 99.4 4.06 13.4 6.5 -0.81 -1.52 -1.03 1.66 2.21 1.17 2.10 AAA Index 4.54 100.3 3.87 12.9 6.7 -0.63 -1.
Slide 29: Municipal Bond Market Update
BONDS Municipal Bond Market Update AAA Muni-to-Treasury Yield Ratios 350% Current 1-Mo. Ago 12-Mo. Ago Median 5Y 81 72 61 73 280% 10Y 81 77 61 84 210% 30Y 95 92 84 94 140% 10Y 30Y 70% 5Y 0% Credit Quality Spreads vs. AAA (bps) 200 Current 1-Mo. Ago 12-Mo. Ago Median AA 11 11 7 16 150 A 35 35 31 38 B
Slide 30: Emerging Markets Bond Market Update
BONDS Emerging Markets Bond Market Update Sovereign EMD Spreads (USD) Corporate EMD Spreads (USD) Local EMD Yields (%) Bps Bps Bps 700 700 10% 8% 500 500 6% 300 300 4% 100 100 2% '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '15 '16 '17 '18 '19 '20 '21 '22 '
Slide 31: Asset Class Return Analysis (%)
BONDS Asset Class Return Analysis (%) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD 2025 Higher EMD (Local Investment Global Agg Global Agg Municipal High Yield Municipal High Yield Bank Loan High Yield Bank Loan Currency) Grade Ex-U.S. Ex-U.S. 3.30 17.49 1.28 5.36 -0.77 13.46 8.95 15.21 14.
Slide 32: Performance: Market Barometer (%)
EQUITIES Performance: Market Barometer (%) 1-Month Returns 1-Year Returns 3-Year Returns Value Core Growth Value Core Growth Value Core Growth Large Cap -3.05 -0.60 1.77 8.55 11.94 14.53 7.61 11.87 15.60 Mid Cap -2.48 -1.03 3.36 5.24 7.33 13.65 5.04 7.08 11.70 Small Cap -4.02 -2.31 -0.64 -0.68 0.87
Slide 33: Dividend Yields and Volatility Analysis
EQUITIES Dividend Yields and Volatility Analysis Historical Yields Current Yields 4.0% 5.0% 4.16 3.5% MSCI EAFE 4.0% 3.0% 3.05 3.0% 2.71 2.5% MSCI EM 1.86 2.0% 2.0% 1.32 MSCI World 1.5% 1.0% S&P 500 1.0% 0.0% '20 '21 '22 '23 '24 '25 S&P 500 MSCI World MSCI EM MSCI EAFE 10 Yr Treasury Correlation of
Slide 34: Valuation Analysis
EQUITIES Valuation Analysis Regions/Styles: Current NTM P/E vs. 10-Year High, Low, Average High 70.0 65.3 Current 60.0 Average Low 50.0 40.0 32.7 30.0 22.9 24.1 25.6 23.4 21.2 19.7 MSCI World 22.4 18.1 20.0 20.1 18.1 17.6 17.4 17.4 18.3 15.7 Current P/E 16.1 17.0 15.3 15.2 14.0 13.9 16.9 16.8 12.7 1
Slide 35: Valuation Analysis
EQUITIES Valuation Analysis S&P 500 Sectors: Current NTM P/E vs. 10-Year High, Low, Average High 77.2 70.0 Current Average 50.0 45.3 Low 30.4 24.0 26.2 30.0 22.1 21.3 S&P 500 25.4 22.6 19.9 24.1 17.7 22.1 24.7 22.3 17.5 19.8 18.7 21.6 19.8 17.8 Current P/E 16.6 15.3 16.1 16.9 16.3 17.3 17.7 14.2 13.
Slide 36: Corporate Earnings Growth
EQUITIES Corporate Earnings Growth Regions/Styles Expected EPS Growth 50.0 2024 EPS Growth 36.67 40.0 30.0 28.97 20.0 14.57 14.45 18.25 14.08 9.67 17.32 9.40 10.48 7.58 6.35 10.0 3.33 1.92 7.41 7.46 2.66 0.16 3.02 0.50 0.0 (10.0) Russell 2000 MSCI World ex Russell 1000 MSCI EM S&P 500 MSCI Asia Pac
Slide 37: S&P 500 Index: 1-Month Return Analysis
EQUITIES S&P 500 Index: 1-Month Return Analysis 3-5 Year Earnings Growth Trailing 12 Month P/E Return On Equity 6.0% 2.0% 4.2 6.0% 5.0 4.0% 0.3 4.0% 0.0% 2.0% 2.0% 0.0% (0.7) (0.7) (0.5) 0.0% (2.0%) (0.7) (0.5) (2.0%) (2.0%) (0.7) (2.5) (1.1) (4.0%) (2.8) (2.4) (2.0) (6.0%) (4.7) (4.0%) (3.2) (4.0%)
Slide 38: S&P 500 Index: YTD Analysis
EQUITIES S&P 500 Index: YTD Analysis 3-5 Year Earnings Growth Trailing 12 Month P/E Return On Equity 4.0% 0.0% 1.0 4.0% 1.8 0.0% 0.0% (1.7) (2.5) (4.0%) (2.4) (1.8) (4.0%) (4.0%) (3.2) (4.9) (4.8) (4.9) (4.9) (8.0%) (8.0%) (5.5) (7.3) (7.1) (5.6) (8.4) (8.3) (12.0%) (12.0%) (8.0%) (7.1) Market Cap B
Slide 39: Index Sectors: Return Analysis
EQUITIES Index Sectors: Return Analysis S&P 500 MSCI World Return % Return % 30.00 1 month 30.00 1 month YTD YTD 1 year 1 year 20.00 20.00 10.00 10.00 0.00 0.00 (10.00) (10.00) (20.00) (20.00) Past performance is no guarantee of future results. It is not possible to invest directly in an index. Sour
Slide 40: Current Characteristics and Sector Weights
EQUITIES Current Characteristics and Sector Weights MSCI MSCI World ex MSCI MSCI MSCI S&P 500 R2000 R1000G R1000V World USA Small Cap EAFE EM MSCI Europe Asia Pac Number of Holdings 503 1936 392 869 1352 2195 694 1206 399 1256 Maximum Market Cap $3,192.19B $17.79B $3,192.19B $1,150.76B $3,195.55B $1
Slide 41: Asset Class Return Analysis (%)
EQUITIES Asset Class Return Analysis (%) 1-Mo. 3-Mo. YTD 1Y 3Y 5Y 10Y 2024 2023 2022 2021 2020 S&P 500 -0.68 -7.50 -4.92 12.10 12.18 15.61 12.32 25.02 26.29 -18.11 28.71 18.40 Russell 1000 Defensive -1.10 -5.04 -2.42 11.39 10.00 12.76 11.43 18.55 20.23 -16.43 26.93 13.93 Russell 1000 Dynamic -0.08 -
Slide 42: Asset Class Return Analysis (%)
EQUITIES Asset Class Return Analysis (%) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD 2025 Higher Emerging Growth Small-Cap Growth Growth Growth S&P 500 Value Growth Growth International Markets 5.67 21.31 -1.51 36.39 38.49 28.71 -7.54 42.68 33.36 11.76 37.28 International International Int
Slide 43: Developed Market Currency Performance and Yields
ALTERNATIVES Developed Market Currency Performance and Yields Spot Returns vs. USD (%) Spot Returns vs. EUR (%) Local Interest Rates (%) Currency 1-Mo. YTD 1Y 3Y 5Y 1-Mo. YTD 1Y 3Y 5Y 1Y U.S. Dollar (USD) - - - - - -4.97 -8.91 -5.94 -2.46 -0.74 4.00 Euro (EUR) * 5.24 9.78 6.31 2.52 0.75 - - - - - 1.
Slide 44: Emerging Market Currency Performance and Yields
ALTERNATIVES Emerging Market Currency Performance and Yields Spot Returns vs. USD (%) Spot Returns vs. EUR (%) Local Interest Rates (%) Currency 1-Mo. YTD 1Y 3Y 5Y 1-Mo. YTD 1Y 3Y 5Y 1Y Asia, excluding Japan Chinese Renminbi (CNY) -0.15 0.50 -0.29 -3.20 -0.59 -5.12 -8.45 -6.21 -5.58 -1.32 1.44 Malay
Slide 45: Emerging Market Currency Performance and Yields
ALTERNATIVES Emerging Market Currency Performance and Yields Spot Returns vs. USD (%) Spot Returns vs. EUR (%) Local Interest Rates (%) Currency 1-Mo. YTD 1Y 3Y 5Y 1-Mo. YTD 1Y 3Y 5Y 1Y Europe Czech Koruna (CZK) 5.43 10.80 7.31 2.05 2.38 0.19 0.93 0.93 -0.45 1.62 3.25 Hungarian Forint (HUF) 4.88 11.
Slide 46: Local Sovereign Currency Yields
ALTERNATIVES Local Sovereign Currency Yields Developed Market Local Interest Rates % (1 Year) Emerging Market Local Interest Rates % (1 Year) Current 1 Yr Prior Current 1 Yr Prior 4.00 44.92 U.S. Dollar (USD) Turkish New Lira (TRY) 5.06 42.49 3.98 Nigerian Naira (NGN) 21.57 Norwegian Krone (NOK) 11.
Slide 47: Commodities Return Analysis (%)
ALTERNATIVES Commodities Return Analysis (%) Index 1-Mo. 3-Mo. YTD 1Y 3Y 5Y Index 1-Mo. 3-Mo. YTD 1Y 3Y 5Y Bloomberg Commodity Index -4.81 -0.30 3.64 4.08 -3.70 13.74 Bloomberg Sub Industrial Metals -6.94 -0.33 1.04 -7.49 -6.91 11.02 Bloomberg Sub Agriculture 1.18 -1.53 3.23 3.24 -4.76 13.70 Aluminu
Slide 48: Asset Class Return Analysis (%)
ALTERNATIVES Asset Class Return Analysis (%) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD 2025 Higher Multi-Strategy MLP Long/Short Equity Fixed Income Long/Short Equity Convertible MLP MLP MLP MLP MLP Arbitrage Arbitrage 3.84 18.31 13.41 12.17 40.17 30.92 26.56 24.41 12.58 1.10 10.25 Long/
Slide 49: Major Asset Classes Correlation Table
TRANSITION Major Asset Classes Correlation Table Emerging S&P 500 International Markets Small Cap U.S. Aggregate Municipal High Yield Bank Loan Commodities S&P 500 1.00 0.85 0.68 0.86 0.39 0.42 0.80 0.60 0.38 International 0.83 1.00 0.79 0.76 0.43 0.47 0.80 0.59 0.42 Emerging 0.60 0.74 1.00 0.61 0.4
Slide 50: Fund and ETF Flows by Category
TRANSITION Fund and ETF Flows by Category Top 10 Open-End Mutual Fund Categories Top 10 Exchange-Traded Fund Categories by Monthly Flows ($MM) by Monthly Flows ($MM) 1 Mo. 3 Mo. 12 Mo. 1 Mo. 3 Mo. 12 Mo. Intermediate Core-Plus Bond 6,706 4,587 13,767 Large Blend 21,973 69,667 378,497 Multisector Bon
Slide 51: Major Asset Class Return Analysis (%)
TRANSITION Major Asset Class Return Analysis (%) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD 2025 Higher Municipal Small-Cap Emerging Markets Municipal S&P 500 Small-Cap S&P 500 Commodities S&P 500 S&P 500 International 3.30 21.31 37.28 1.28 31.49 19.96 28.71 16.09 26.29 25 .02 11.76 S&P 5
Slide 52: Portfolio Solutions Group
Portfolio Solutions Group The Portfolio Solutions Group is a comprehensive multi-asset business, with activity across all asset strategies and type, both traditional and alternative, through solutions that span fully liquid (public assets), comprehensive JIM CARON EWA TUREK ERIC ZHANG SCHUYLER (publ
Slide 53: Asset Allocation Committee
Asset Allocation Committee MARK BAVOSO VISHAL KHANDUJA, CFA The Asset Allocation Committee Senior Portfolio Manager, Global Multi-Asset Team Portfolio Manager is an independent group of senior Co-Head of the Broad Markets Fixed Income Team JUSTIN BOURGETTE, CFA investment professionals across Portfo
Slide 54: Index Definitions
Index Definitions The Bloomberg Capital Expenditure Index measures capital CBOE Volatility Index (VIX) tracks the implied volatilities of a wide range The MDAX lists German companies trading on the Frankfurt Stock expenditure in the U.S. of S&P 500 Index options. Exchange. It includes the 50 Prime S
Slide 55: Index Definitions, Terms and About Risk
ADDITIONAL INFORMATION Index Definitions, Terms and About Risk The MSCI World Index is a free float adjusted market capitalization weighted index that is designed to measure sponsor, endorse, sell or promote the Fund, will not have any liability with respect thereto and do not have any the global eq
Slide 56: Risk Considerations
ADDITIONAL INFORMATION Risk Considerations This material has been prepared on the basis of publicly available information, internally developed data Diversification does not eliminate the risk of loss. and other third-party sources believed to be reliable. However, no assurances are provided regardi
Slide 57: Additional Information
ADDITIONAL INFORMATION The whole or any part of this material may not be directly or indirectly reproduced, copied, modified, Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain. Germany: MSIM FMIL used to create a derivative work, performed, displayed, published, posted, licens
Slide 58: Additional Information: Asia Pacific
ADDITIONAL INFORMATION ASIA PACIFIC Hong Kong: This material is disseminated by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this material ha
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