Profile: MSCI Inc (MSCI.K)
9 Dec 2013
MSCI Inc. (MSCI), incorporated on July 2, 1998, is a provider of investment decision support tools, including indices, portfolio risk and performance analytics and corporate governance products and services. The Company operates in two segments: the Performance and Risk business, and the Governance business. MSCI’s products are its global equity indices and environmental, social and governance (ESG) products marketed under the MSCI and MSCI ESG brands, its portfolio risk and performance analytics covering global equity and fixed income markets marketed under the Barra brand, its market and credit risk analytics marketed under the RiskMetrics and Barra brands, its governance research and outsourced proxy voting and reporting services, and executive compensation analytics tools marketed under the ISS brand, its valuation models and risk management software for the energy and commodities markets marketed under the FEA brand, its private real estate benchmarks under the IPD brand and its forensic accounting risk research, legal and regulatory risk assessment and due diligence products marketed under the CFRA brand.
The Company’s products and services address multiple markets, asset classes and geographies and are sold to a diverse client base, including asset owners, such as pension funds, endowments, foundations, central banks, family offices and insurance companies; institutional and retail asset managers, such as managers of pension assets, mutual funds, exchange traded funds (ETFs), real estate, hedge funds and private wealth; financial intermediaries, such as banks, broker-dealers, exchanges, custodians and investment consultants, and corporate clients. It had approximately 7,500 clients across 83 countries. Its revenues are grouped into five product and/or service categories: index and environmental, social and governance (ESG), risk management analytics products, portfolio management analytics, energy and commodity analytics and governance.
Performance and Risk Business Segment
MSCI’s Performance and Risk business is a global provider of investment decision support tools, including equity indices, real estate indices and benchmarks, portfolio risk and performance analytics, credit analytics and ESG products. It also has product offerings in the areas of energy and commodity asset valuation analytics and fixed income portfolio analytics. The Company’s products consists of index data, risk and analytics data and ESG ratings, analysis and research delivered via data feeds and software applications. MSCI’s index and risk data are created by applying its models and methodologies to market and fundamental data. The Company’s software applications offer its clients portfolio analytics to perform analysis of their portfolios, using its risk data, the client’s portfolio data and fundamental and market data.
The Company’s Performance and Risk products are used in many areas of the investment process, including portfolio construction and rebalancing, performance benchmarking and attribution, risk management and analysis, index-linked investment product creation, asset allocation, assessment of social responsibility, environmental stewardship and the effects of climate change on investments, investment manager selection and investment research. The products within MSCI’s Performance and Risk business are its Global Equity Indices and ESG products marketed under the MSCI and MSCI ESG brands, its market and credit risk analytics marketed under the RiskMetrics and Barra brands, the Company’s portfolio risk and performance analytics covering global equity and fixed income markets marketed under the Barra brand and its valuation models and risk management software for the energy and commodities markets marketed under the FEA brand.
The Company's MSCI-branded equity indices are designed to measure returns available to investors across a variety of markets, sizes, styles and industries. MSCI’s MSCI ESG indices are designed to help clients incorporate environmental, social and governance factors into their investment decisions. As of December 31, 2012, it calculated over 160,000 indices daily. In addition to delivering its products directly to MSCI’s clients, as of December 31, 2012, the Company also had more than 65 third-party financial information and analytics software providers that distributed its various equity index products worldwide. The Company’s primary index products include MSCI Global Equity Indices, MSCI Risk Premia Indices, MSCI Economic Exposure Products and Indices, MSCI Custom Indices, MSCI ESG Indices and Global Industry Classification Standard (GICS). MSCI Global Equity Indices are designed to measure returns available to global investors across a variety of public equity markets. As of December 31, 2012, the MSCI Global Equity Indices provided equity market coverage for over 75 countries in its market categories, as well as various regional indices built from the component country indices, including MSCI EAFE (Europe, Australasia, and Far East), MSCI World, MSCI ACWI IMI (All Country World Investable Market Index) and MSCI Emerging Market Indices. In addition, the MSCI Global Equity Indices include industry indices, thematic and strategy indices, value and growth style indices and large-, mid-, small- and micro-capitalization size segment indices.
The MSCI Risk Premia Indices seek to address institutional investors whose asset allocation processes are gradually shifting from asset classes to risk groupings, such as growth, income, inflation, volatility and liquidity. The MSCI Risk Premia Indices capture the many equity return components that were once considered added value, or alpha, but that can be attributed to sources of systematic return, such as value, size, volatility, or momentum. MSCI offers a range of such risk premia or alternative beta indices, including the MSCI Minimum Volatility, Risk Weighted, Value Weighted Indices and MSCI Quality Indices.
As of December 31, 2012, the Company calculated approximately 5,900 custom indices, which apply a client’s customization criteria to an existing MSCI index. The MSCI ESG Indices include sustainability indices, indices that take into account certain values, norms or ethical standards, environmental-themed indices, such as alternative energy or clean technology and custom indices. GICS was developed and is maintained jointly by MSCI and Standard & Poor’s Financial Services, LLC (Standard & Poor’s). MSCI also offers GICS Direct, a joint product of MSCI and Standards & Poor’s. GICS Direct is a database of more than 43,000 active companies and over 50,000 securities classified by sector, industry group, industry and sub-industry in accordance with GICS methodology. MSCI ESG products and services help investors integrate ESG factors into their investment decisions. MSCI ESG products include research, screening and modeling tools that allow institutional investors and asset managers. MSCI ESG products also provide ESG ratings and analysis on thousands of companies worldwide.
The Company’s risk management analytics products offer a risk assessment framework for managing and monitoring investments in a variety of asset classes across an organization. The products are based on MSCI’s integrated fundamental multi-factor risk models, value-at-risk methodologies and asset valuation models. Its two major products in Risk Management Analytics Products include BarraOne and RiskManager in addition, MSCI offers Hedge Fund Risk Transparency Solutions, DataMetrics, WealthBench and CreditManager. BarraOne, powered by the Barra Integrated Model, provides clients with global, multi-asset class risk analysis using Barra fundamental factor technology. BarraOne also includes value at risk (VaR) simulation, stress testing, optimization and performance attribution. The product is accessed by clients via interactive Web-based session, Web services or on an outsourced basis. Clients use RiskManager for daily analyzing, measuring and monitoring of market risk at fund and firm level, for sensitivity and stress testing, and for interactive what-if analysis. RiskManager includes, among other modules, the CounterParty Risk Reporting module. HedgePlatform, a reporting service, and InterSight, an interactive Web-based reporting service, allow clients that invest in hedge funds, including funds of funds, pension funds and endowments, to measure, evaluate and monitor the risk of their hedge fund investments across multiple hedge fund strategies. HedgePlatform and InterSight reports include statistics, such as exposure, sensitivities, scenario analysis, stress tests and VaR analysis. DataMetrics is a data service that allows clients to access the market data embedded in RiskManager for use in their own or other third-party systems.
WealthBench is an investment planning platform for private banks, financial advisors, brokerages and trust companies. CreditManager product is a portfolio credit risk management system used primarily by banks to calculate economic capital and credit scores, facilitate risk-based pricing and measure risk concentrations. The application is designed to consolidate and compare risks and opportunities across multiple credit exposures including bonds, credit derivatives and traditional lending. MSCI’s Barra-branded equity portfolio management analytics products are designed to assist investment professionals in analyzing and managing risks and returns for equities at both the asset and portfolio level in developed, emerging and frontier equity markets. Barra equity models identify and analyze the factors that influence equity asset returns and risk.
The Company’s Barra equity products utilize the Company’s fundamental multi-factor equity risk model data. Its global equity models include Barra Global Equity Model (GEM3) and Barra Integrated Model (BIM). GEM3 is a multi-factor risk model designed for use in global equity portfolio management and construction. It uses a set of factors that explain the sources of global equity risk and returns. BIM provides a detailed view of risk across markets and asset classes, including currencies, equities, fixed income assets, commodities, mutual fund assets and hedge fund assets. The Company’s single country and regional risk models include Barra Single Country Equity Models and Barra Regional Equity Models. Its single country equity models identify a set of factors to explain sources of risk and return of portfolios in that country. MSCI produces two regional equity models, the Europe Equity Model (EUE3) and the Asia-Pacific Equity Model (ASE1).
Barra Aegis is a software application for equity risk management and portfolio analysis that is powered by its equity risk data. It is deployed by the client as a desktop application. Barra Aegis also provides a factor-based performance attribution module. Barra Portfolio Manager is an integrated risk and performance platform that is designed to help fund managers and their teams gain additional portfolio insight, manage a more systematic investment process and make faster, more informed investment decisions. Barra Equity Models Direct delivers MSCI’s risk data to clients for integration into their own software applications. The risk data in Barra Equity Models Direct is also available via third-party providers.
The Company offers the risk data from global, regional and single country Barra risk models and most of these models are available in short-term and long-term time horizons. Barra Cosmos enables global fixed income portfolio managers to manage risk and optimize return in a multi-currency, global bond portfolio. The Company’s Energy and Commodity Analytics products are software applications that offer a variety of quantitative analytics tools for valuing, modeling and facilitating the hedging of physical assets and derivatives across a number of market segments including energy and commodity assets. These products are used by investors, traders and those hedging investments in these asset classes. The software applications are not provided with any market data or index or risk data. These products are branded FEA and include products such as FEA@Energy, FEA VaRworks and FEA StructureTool.
The Company’s Governance business is a provider of corporate governance and financial research and analysis services to institutional investors and corporations around the world. Among other things, the Governance business facilitates the voting of proxies by institutional investors and provides research and analysis to help inform voting decisions and identify risk. The Governance business offers both global security coverage and products and services, including proxy voting, policy creation, research, vote recommendations, vote execution, post-vote disclosure and reporting and analytical tools. The products within its Governance business are its governance research and outsourced proxy voting and reporting services marketed under the ISS brand and the Company’s forensic accounting risk research, legal/regulatory risk assessment and due diligence products marketed under the CFRA brand.
The Company categorizes its Governance business into three categories: Proxy Research and Voting, Global Proxy Distribution (GPD) and Securities Class Action Services (SCAS), ISS Corporate Services and Financial Research and Analysis (FR&A). MSCI’s Proxy Research and Voting, GPD and SCAS products are designed to provide proxy services, including proxy voting and research and analysis to help inform voting decisions and assess issuer-specific risk, to institutional investors globally. Institutional Shareholder Services Inc. (ISS) is the proxy advisory firm that offers a proxy voting service, including policy creation, research, vote recommendations, vote execution and reporting and analytical tools. During 2012, Proxy Research and Voting, GPD and SCAS accounted for approximately 674% of revenues attributable to its Governance business. Through its ProxyExchange platform, ISS provides clients with vote recommendations, analyses and online voting capabilities. As of December 31, 2011, research coverage provided on over 5,900 the United Sates -based companies and over 35,000 non-United Sates companies.
The Company’s product the ExecComp Suite, which includes its ExecComp Analytics product and ongoing benchmarking of equity plan value transfer, burn rates, and dilution. Governance Exchange provides an online discussion forum to facilitate constructive dialogue on corporate governance issues among those involved in corporate governance, including institutional investors, board directors and corporate executives. Members of Governance Exchange also have access to a diverse range of corporate governance viewpoints and research through Webcasts, white papers, surveys, and analysis. Proxy Research and Publications offers a searchable database of publications, research articles and online reports designed to help corporate secretaries, investor relations professionals, executives, directors and other professionals track ISS recommendations and analysis.
The Company competes with FTSE International, Ltd, Northwestern Mutual Life Insurance Group, Standard & Poor’s Financial Services, LLC, S&P Dow Jones Indices LLC, CME Group, Dow Jones & Company, Inc., The McGraw-Hill Companies, Inc., NYSE Euronext, the DAX, STOXX Ltd., China Securities Index Co., Ltd., Singapore Exchange Limited, Nikkei Inc., Nomura Securities, Ltd., Tokyo Stock Exchange, Inc., SunGard Data Systems Inc., Axioma, Inc., Bloomberg Finance L.P., FactSet, Northfield Information Services, Inc., Wilshire Analytics, IBM, Barclays Capital, BlackRock, Imagine Software, Moody’s Corporation, Broadridge Financial Solutions, Equilar, Inc., Glass and Lewis & Co.
7 World Trade Center
49th Floor, 250 Greenwich Street
NEW YORK NY 10007
Company Web Links
- Exclusive: Barclays weighs index unit sale after MSCI approach - sources
- MSCI reclassifies stocks in emerging, frontier market indexes
- UPDATE 1-MSCI reclassifies stocks in emerging, frontier market indexes
- UPDATE 3-MSCI studies sale, other options for proxy adviser ISS
- MSCI exploring strategic options for proxy advisory business