What is 'MSCI Inc'

MSCI Inc is an investment research firm that provides indices, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds. MSCI provides its clients with investment tools from Barra, Financial Engineering Associates, RiskMetrics, Institutional Shareholder Services, Measurisk, and the Center for Financial Research and Analysis. It also publishes indices that are widely available to the investing public.

BREAKING DOWN 'MSCI Inc'

One of the units of Capital Group, an investment firm based in Los Angeles, was Capital International (CI) which introduced a number of stock indices in 1969 to mirror the international markets. The Capital International indices were the first global stock market indices for markets outside the U.S. When Morgan Stanley (MS) bought the licensing rights to CI’s data in 1986, the acronym MSCI was formed, and Morgan Stanley became MSCI’s largest shareholder. In 2004, MSCI acquired Barra, a risk management and portfolio analytics firm, for approximately $816.4 million. The merger of both entities resulted in the firm called MSCI Barra.

MSCI Barra was spun off from Morgan Stanley in a 2007 initial public offering (IPO). The firm trades on the New York Stock Exchange (NYSE) under the stock ticker ‘MSCI’. Since its first trading day in November 2007 when it traded for $23.00, MSCI’s stock price has increased by 455% to $127.71 in November 2017. The firm became a fully independent, stand-alone public company in 2009.

MSCI Indices

MSCI is perhaps best known for its benchmark indices. Its top indices are:

  1. MSCI Emerging Market Index: This index was launched in 1988 and lists constituents from 24 emerging economies including China, India, Thailand, UAE, Colombia, Peru, and Greece.
  2. MSCI Frontier Markets Index: The Frontier index is used as a benchmark to measure the performance of the financial markets in select countries from Asia, Middle East, Africa, South America, and Europe. Some of the frontier regions with stocks included in this index are Nigeria, Argentina, Croatia, Lebanon, Vietnam, and Kenya.
  3. MSCI All Country World Index (ACWI): The ACWI tracks the performance of small- to large-cap stocks from 23 developed and 24 emerging markets, with 2,491 stocks represented.
  4. MSCI EAFE Index: The EAFE Index lists 926 stocks from 21 countries in the Europe, Australasia, and Far East regions in the world.

The MSCI indices are market cap weighted indices, which means that stocks are weighted according to their market capitalization, calculated as stock price multiplied by total number of shares outstanding. Therefore, the stock with the largest market capitalization gets the highest weighting on the index. This reflects the fact that large-cap companies have a bigger impact on an economy than mid- or small-cap companies. A percent change in the price of the large cap stocks in an MSCI index will lead to a bigger movement in the index than a change in the price of a small-cap company.

Each index in the MSCI family is reviewed quarterly and rebalanced twice a year. Stocks are added or removed from an index as analysts within MSCI Inc. ensure that the index still acts as an effective equity benchmark for the market it represents. When an MSCI index is rebalanced, ETFs and mutual funds must also adjust their fund holdings since they are created to mirror the performance of the indices.  

RELATED TERMS
  1. The Morgan Stanley Capital International ...

    The Morgan Stanley Capital International All Country World Index ...
  2. MSCI ACWI - All Country World Index

    The MSCI ACWI is a market capitalization weighted index designed ...
  3. MSCI EMU Index

    The MSCI EMU Index is a market capitalization weighted index ...
  4. International Investing

    International investing is an investing strategy that involves ...
  5. MSCI BRIC Index

    The MSCI BRIC Index is an index measuring the equity market performance ...
  6. Composite

    A composite is a grouping of equities, indexes or other factors ...
Related Articles
  1. Investing

    MSCI Deny Billion Dollar Takeover Talk

    More takeover chatter in the index based market. S&P Global said to offer $120/shr for MSCI, holders may want $130/shr.
  2. Investing

    SCZ: iShares MSCI EAFE Small-Cap ETF

    Read an in-depth analysis of the iShares MSCI EAFE Small-Cap Fund, a well-managed exchange-traded fund that tracks small-cap international stocks.
  3. Investing

    The 5 Best Performing iShare ETFs in 2016 (SLVP, RING)

    Find out what the best-performing ETFs in 2016 are, from the world's largest ETF provider, iShares.
  4. Investing

    Different Ways to Think About the MSCI EAFE Index

    Investors seeking more effective EAFE exposure can consider these funds.
  5. Investing

    MSCI Decision Could Affect This ETF

    Another country could be affected in a big way by Tuesday's MSCI announcement.
  6. Investing

    3 ETFs to Gain Frontier Markets Exposure

    Learn what reforms are benefiting frontier markets and discover three ETFs that can provide investors with exposure to these developing economies.
  7. Investing

    Eyeing Mexico? Look At These ETFs First

    Mexico is a popular destination for your investment dollars. Before you jump in consider these ETFs and their holdings.
  8. Investing

    The Top 3 ETFs For Investing in Mexico (EWW, AMX)

    Discover some of the most popular exchange-traded funds available that offer investors exposure to the economy and stocks of Mexico.
  9. Investing

    The 5 Largest Japan ETFs (EWJ, DXJ)

    Discover several of the largest Japan ETFs, as measured by assets under management, and learn about the investment exposure each provides.
  10. Investing

    Are Currency Hedged ETFs a Good Idea?

    Considering currency-hedged ETFs? Here's a look at eight and what you need to know right now.
RELATED FAQS
  1. Which benchmarks / indexes track the automotive sector?

    Explore some of the major benchmark equity indexes worldwide that analysts and investors use to track the performance of ... Read Answer >>
  2. Is it Possible to Invest in an Index?

    While you cannot buy indexes, which are just benchmarks, we'll show you three ways for you to mirror their performance. Read Answer >>
  3. How is the value of the S&P 500 calculated?

    The S&P 500 is a U.S. market index that gives investors an idea of the overall movement in the U.S. equity market. The value ... Read Answer >>
Trading Center