Praxis Mutual Funds®, advised by Everence® Capital Management, announces a transition for its Praxis International Index Fund. Effective May 25, 2023, the Fund’s benchmark index changed from the MSCI ACWI ex USA Index (Net) to the Morningstar® Global ex-US Target Market Exposure GR USD IndexSM. The new index provides a comparable representation of the foreign-developed and emerging markets in which the Fund invests to that of the prior benchmark index.
Morningstar entered the index business in 2001 but emphasized broad index offerings in the last five years. It hired Ron Bundy, who was the CEO of Russell Indexes, to lead this work. Since then, Morningstar has increased its index offerings to include broad style indexes like the Morningstar® Global ex-US Target Market Exposure GR USD IndexSM.
The objective of Morningstar® Global ex-US Target Market Exposure GR USD IndexSM is to target large-and mid-cap stocks listed in developed and emerging markets outside the U.S. representing the largest 85% of the market by float-adjusted market capitalization. The MSCI ACWI ex USA Index also covers approximately 85% of the global equity opportunity set outside the U.S. Both indices have a similar number of holdings and a similar factor composition.
As of April 30, 2023, MSCI has 2,258 holdings while Morningstar has 2,351 holdings. The dividend yield1 for the Morningstar index is 3.13% while the MSCI index is 3.17%. The price to book2 is also similar, with 1.67x for Morningstar and 1.71x for MSCI. The five-year performance standard deviation3 is 17.25% for Morningstar and 17.37% for MSCI.
Chad Horning, CFA®, President of Praxis Mutual Funds says, “We are pleased to partner with the team at Morningstar. The fund will continue to use its optimized index investing approach to offer investors a competitively performing product while providing a strong platform for Praxis impact strategies.”