MSCI: Profiting from the ETF Revolution

MSCI Inc., founded in 1969 as Morgan Stanley Capital International, has evolved from a pioneer in global equity indices to a leading provider of investment decision support tools. The company became independent of Morgan Stanley in 2009 and has since established itself as a cornerstone of the investment industry, serving over 7,500 clients across 95 countries.

MSCI provides essential services through three main segments: Index, Analytics, and ESG & Climate. The company is best known for its equity indices, which serve as benchmarks for global investors and the foundation for countless investment products. More than $15.5 trillion in assets are benchmarked to MSCI indices globally.

We’ll explore how MSCI's competitive advantages, particularly its powerful switching costs and network effects, create a formidable moat. We'll also examine key growth catalysts, including the explosive growth of ETFs and the rising importance of ESG investing, while carefully considering potential risks to the business. MSCI's combination of high margins, recurring revenue, and strong competitive positioning makes it an exemplar of a high-quality company worth owning.

Competitive Advantages

Switching Costs

The index business creates operational and financial switching costs for its users.