MSCI at Barclays Conference: Strategic Growth Amid Volatility

On Wednesday, 07 May 2025, MSCI Inc. (NYSE:MSCI) participated in the Barclays Americas Select Franchise Conference 2025, discussing its strategic direction amid market volatility. Ber Pettit, COO of MSCI, highlighted the company’s robust product pipeline and strategic partnerships, while acknowledging challenges in certain segments. Despite global uncertainties, MSCI remains optimistic about its growth prospects.

Key Takeaways

• MSCI aims for over 5% growth in the active managers segment, with sustained growth in other areas.
• Strong new product pipeline, particularly in index, analytics, sustainability, and climate.
• Strategic partnerships with Moody’s and Swiss Re to enhance private market solutions and climate risk analysis.
• Focus on financial discipline and efficiency, leveraging AI to improve product quality and reduce costs.
• Commitment to sustainable investing, with an emphasis on climate-related risks.

Financial Results

• Active Managers Growth: Targeting growth exceeding 5% in this segment.
• Other Client Segments: Aiming to maintain low-to-mid teens growth rates.
• Expense Discipline: No plans for increased expenses, emphasizing financial efficiency.

Operational Updates

• New Product Pipeline: Stronger than last year, focusing on index, analytics, sustainability, and private markets.
• Index Innovation: Integration of Foxbury’s capabilities to enhance index construction and speed to market.
• Private Markets Expansion: Deepening solutions with new leadership and partnerships, especially with Moody’s for private credit analysis.

Strategic Partnerships

• Moody’s Partnership: Collaboration to provide default probabilities and credit analysis for private credit portfolios.
• Swiss Re Partnership: Expanding capabilities in climate risk, focusing on physical risk and geolocation tools.

Sustainability and Climate

• Business Renaming: From ESG and climate to sustainability and climate, reflecting a broader scope.
• Commitment to Leadership: Leading in sustainable investing, particularly in climate-related risks.

Future Outlook

• Product Monetization: Expecting rapid monetization from custom index capabilities.
• Geographic Diversification: Aiming to benefit from globally diversified portfolios.
• Private Markets Focus: Expanding the Burgess business and introducing valuation analysis for private equity.

Q&A Highlights

• Client Engagement: Institutional investors remain focused on sustainable investing despite political noise.
• Partnership with Moody’s: Emphasizing the combination of MSCI’s data with Moody’s credit modeling for private credit analytics.

For a detailed understanding of MSCI’s strategies and initiatives, please refer to the full transcript below.

Full transcript - Barclays Americas Select Franchise Conference 2025:

Manav Patnaik, Business and Information Services Analyst, Barclays: Good morning, everybody. Thank you for joining us on day two of our conference. Again, I’m Manav Patnaik and Barclays is Business and Information Services analyst. We’re really happy to kick off today with MSCI and as always, we have Ber Pettit who’s the COO. So Ber, thank you again for being here.

Ber Pettit, COO, MSCI: My pleasure. Hopefully,

Manav Patnaik, Business and Information Services Analyst, Barclays: the layout and the the no shining lights is better this time around versus last But just to just to kick it off, on a really high level, Bear. Sure. You know, you know, needless to say a lot of noise out there in the world, a lot of uncertainty. Yeah. From your business, from your standpoint, from your conversations, what are some of the impacts, if any, that you’ve seen from your clients?

Ber Pettit, COO, MSCI: Yeah. Look. So, I don’t know if this is a slightly maybe surprising answer. But, you know, I I I think what’s, you know, what’s striking at this very moment and and in view of the interesting, in quotes, things that have been happening in the world, you know, it could be a different story by next Tuesday. But I think after a period of initial, you know, volatility and randomness, I think what’s striking, you know, from from our clients right now is the degree to which they’re not taking any very specific or exact actions in view of recent events.

Right? And that I think can be taken as either, you know, a negative, a positive, or a neutral because I do think that we’re in you know, in kind of a slight holding pattern, both as relates to clearly the tariff topic and the degree to which that, affects the investing landscape, but I think also just the general approach of the administration to, if you’d wanna call it crudely, its approach to capital markets and the degree to which it cares or not as to what’s happening in the capital markets, of which clearly the most, I would say, notwithstanding the fact that, you know, the the the world we chiefly live in is more driven by equities than by by fixed income. I think that the the epicenter of the spookiness or the thing that really chilled people was when there was clearly, you know, a pretty large sell off in treasuries at the longer end of the curve. And I think that that was the thing more than the correction correction in equity markets that made people feel like, do we have some really systemic risks here? But it seems like for the moment, we’ve taken a step back from that.

And so consequently, you know, we’re we’re carrying on as normal. We’re trying to, well, you know, trying to provide the best services we can to our clients. And, you know, we’ll have to wait and see where the next iteration of this the market volatility plays out or not. Got it.

Manav Patnaik, Business and Information Services Analyst, Barclays: Yes. It almost sounds like the ninety day pause had clients just pause on what they were doing too. But you also talked about deals that could have closed Q1, that went to Q2. So was that separate of this noise? Or can you just give us some color?

Ber Pettit, COO, MSCI: Yes. Look, again, I don’t want to be excessively cute, but since this happened to have come up in the earnings call. And just as a follow-up to that, a few of those deals have already closed. Two of them that I was personally involved in, I mentioned that on the call that some things have been delayed. And so as a slight bit of positive news, already now, some of those deals have closed in the last few weeks.

So so the way I would say it is, you know, again, keeping us thematically, that’s not unusual. It would might have happened last year or the year before or what have you. And if we look at our kind of our our pipeline formation right now, you know, it it doesn’t look unusual. And, you know, you know, we clearly we we we always have a slight weighting towards the end of the quarter in terms of deals coming in, which, by the way, we’re trying to specifically mitigate that. I won’t go into arcane internal management stuff, but we’re trying to make sure that happens less and try to get more things done earlier in the quarter.

But I think overall, you know, again, I I we’re in highly unusual circumstances, but I think, you know, in terms of the markets, but in terms of the business, you know, not really that unusual terms of what we’re seeing.

Manav Patnaik, Business and Information Services Analyst, Barclays: So so if things hadn’t changed, maybe just help us appreciate what the start of the year look like. You know, so Yeah. You know, last year was a tough new business year Yes. With the lag from, you know, some of the outflows we saw. Yeah.

Things got better. I think everyone was looking forward to maybe some pickup in new business. Yeah. But we didn’t really see that in the first quarter to the extent we wanted. Yeah.

So help us, like, will we Sure. Are we getting carried away? Are we

Ber Pettit, COO, MSCI: too early? No. No. Look. So so I think there’s some look.

In my prepared remarks in the last quarter were around, you know, the the differing performances of the client segments, and the general underperformance of the active managers and the outperformance of the other client segments, I mean, almost universally, the other client segments were above the average growth rate and the active managers were below it. So so, you know, I don’t think that that pattern will change dramatically. Hopefully, it’ll get a little better on the active managers and will continue on the other client segments. I think the the only element in that narrative that I that I want to correct a bit is I don’t want to place excessive emphasis on the environment. I think we have a lot of the, you know, if you like, the the tools in our own hands.

And I think notably, for the rest of this year, which has been a big personal focus of mine even in the last few weeks is I think our new product pipeline is looking stronger, bringing more products and enhancements to market. So, you know, look. If if I if I look going back to being at this conference, let’s say, a year ago and leaving aside the environment aside for a moment, I think the our our new product pipeline is stronger than it was a year ago. I think we’re bringing out more things in index, in analytics, in in sustaining in climate, notably in climate, definitely in private markets. So I think that while, you know, of course, we have some depend you know, some dependency on the market and the environment, You know, I also like to think that we have a lot of tools within our own control in terms of new product development to, you know, improve the path that we’re on.

Got it. Yeah.

Manav Patnaik, Business and Information Services Analyst, Barclays: And and maybe can you just help me? You about strong sales pipeline. You talked about strong new product pipeline. Like, what’s the convert like, is it a long sales cycle perhaps, which

Ber Pettit, COO, MSCI: so look, I think I think, again, it depends on it depends on the product area and the client type. So I might go through every client type and every product. It’s like a grid. But, clearly, if you are selling a large multi asset class risk system to go across an entire asset management firm globally, it’s by definition, you know, a much longer sales pipeline than selling some new interesting dataset to a hedge fund who thinks they can monetize it in the next few weeks, right? So so I do think it’s hard to generalize across what we do, you know, to get in quote one answer.

But I I I the way I would say it is, you know, I wouldn’t I wouldn’t say the pipeline is strong, but I would say it’s normal. And I would say that we we are definitely, you know, objectively looking at at what we’re bringing to market. We will be bringing more more products to market in the next six months than we did in the last six months and in the six months before that. And and some of those are things which I think are, you know, more immediately monetizable, like bringing a lot of the custom index capabilities online is, you know, not instant monetization, but very close, rapid monetization. And then there are others which then are like, oh, you guys are doing that.

We again, there’s a longer sales process. Okay. Right.

Manav Patnaik, Business and Information Services Analyst, Barclays: You mentioned how the asset manager population was growing below the average and probably Yeah. You know, will be there. Is that the difference behind between getting back to 10% subscription Yeah. On the index side?

Ber Pettit, COO, MSCI: Look, I put it this way. We we definitely want our aspiration and our plans are definitely to grow more than 5% in that segment. So if you add up the sum of our plans in which we’ve been going through, we had a whole we actually happen to have a long management committee plus meeting on this yesterday. So looking forward to the rest of the year, our goal and our plan is to do better than that number. You know, we’re in volatile circumstances.

I don’t know what will I but but, you know, our goal and our aspiration is to do better than that number. And for sure, we want to continue to do the stronger kind of low, you know, low mid teens numbers depending on the other segments that we’ve been through, in the other client segments, and we don’t see we don’t see reasons now why those numbers won’t be sustainable. So it’s like the way I would so to to put all of that in a nutshell, one, we think we can do better than 5% for sure on active managers, And we would continue, we believe we can do, you know, continue the growth rates we currently have in the other segments. Right?

Manav Patnaik, Business and Information Services Analyst, Barclays: Okay. Fair enough. So new business was one side. On the cancellation side, obviously, last year was elevated. Just help us with what do you think the environment on the cancellation side could look like now.

Ber Pettit, COO, MSCI: Yeah. So look, again, always a little note of caution. I’d rather, you know, underpromise and overdeliver. So we had very strong cancellation numbers in the previous quarter. I think, generally, have strong client relationships.

You know, our tools are often as needed or more needed in a volatile environment than in a, you know, than in a calm one. You know? So so it’s not like people wake up in the midst of crazy market volatility and start canceling their risk systems. So it should be a little facetious. So so we have a lot of demand from clients for stress testing, for understanding drivers of risk and return.

Actually, you can go on our website. We’ve been doing a lot of works around the tariffs and stress testing around the tariffs and all of that. So I think, look, allowing for the fact that there can be a merger that happens that we can’t foresee. You know, there can be a client distress event. But normalizing for all of that, I think we should have decent, you know, retention rates and, you know, I I can’t give you an exact percentage, but I don’t see right now evidence that that we’re going to have, you know, bad cancellations or something of that kind.

I think our client relationships are good. And then the question of where does the number exactly land may depend on the quarter and circumstances, but I think we’re generally sticky and our clients like our products and are using them intensely. Got it.

Manav Patnaik, Business and Information Services Analyst, Barclays: Okay. Maybe taking a little bit step back as well. I think when you report your geographic breakdown is based on where the clients are. But when when people think of MSCI, we think of the ACWI emerging markets index. I guess my question is how would you frame how much of a non US index business are you or is that not a fair acquisition?

Ber Pettit, COO, MSCI: Look. So so so the way that I would say it is, which is the way that I would frame it is when The US has a US equities have a sustained outperformance, it tends to help some of our competitors, notably S and P, a bit more than us. When there’s a slight reallocation to more ex US exposures at the margin, it’s beneficial for us. Now those things don’t necessarily filter through, like, immediately. Sometimes, like, in ETF flows, may.

If there’s if there’s flows clearly from from from US exposure ETF to non US exposure ETFs, that at the margin will impact us. But I think generally, you know, the some of those things are are more slower burn type of things where where people, you know, issue more funds or or, you know, or or or buy more products that are, you know, ex US analytics data type of products from us. So the way that I would say it is, it’s not a it’s not a, a speedboat. It’s not like a switch that, you know, that that that hits us. But, you know, if if there is a rebalancing towards a more diversified global portfolio by many investors and a reduction in their often overweight position to The US, that will, at the margin, benefit us.

Yeah.

Manav Patnaik, Business and Information Services Analyst, Barclays: Got it. Yeah. And I think you answered, but let me ask it another way like, I I, you know, I guess help us from not getting too carried away on if there is Yeah. Yeah. Like, how slowly like Yeah.

How much, you know, how gradually does this usually start benefiting you guys?

Ber Pettit, COO, MSCI: Well, look, it’s been a sustained movement now for quite a long time. Right? So so I think, I’m trying to even think when it would have was the last time that it was moving in the other direction. It’s been a very long term trend now, which is why The U. S.

Got up to its peak weight in equity that it’s ever been, right? So I think that it’s hard to to extrapolate exactly because, you know, all these market circumstances are somewhat different. So so yeah. So I I I think it would be highly speculative to say, you know, it takes three months, it takes six months. I’m just as a general observation, the more that clients have globally diversified portfolios and are looking at a different a whole range of different exposures, it benefits MSCI over time.

Got it.

Manav Patnaik, Business and Information Services Analyst, Barclays: You know, you mentioned your your new product pipeline is gonna be stronger the next six to twelve months than it was the last six to twelve months. But even within that, I think you said at one point that the next two quarters are gonna see a lot more index in the Can you just elaborate on

Ber Pettit, COO, MSCI: so so basically, so we acquired, this company called Foxbury who have a very sophisticated, very flexible index construction and back testing engine. And we had to so so, basically, think of it as a flexible, attractive, modern front end. But we have our whole back end index production environment, you know, which is like the heavy duty environment that produces the index every day where all the, you know, corporate actions are done, which is the trillions and trillions of dollars of benchmark. So, basically, once we acquired them, we had to take their front end and engineer it into our index production back end. And and you do that basically through different index methodologies.

The most simple ones, trying to do a country fund, trying to do you know? And then you go to the more complex methodologies using an optimizer, using constraints, blah blah blah. So we’re working through all of those. And in the next few months, basically, that work will be done. And so we will be able to go out to clients and and and fully market all of those capabilities.

And and and and I think and so so it’s one, we can do a broader range of things than we could previously. So it’s given us more flexibility, but also extremely importantly, it’s speed to market. So one of the one of the things, you know, is in I’ve been traveling around in various places. I was in Dublin a few weeks ago and, you know, a client said, look. We we wanna work with you guys, but your, you know, your back testing and simulation was too slow, you know, and this is a this is a basically an Italian, you know, fintech type of distribution where they wanna bring products together.

They’re like, the Salesforce gets an idea. They wanna bring a product, like, forty eight hours later. So it’s not like a pension fund where you’ve got time to talk to them and whatever. So using that as an example, you know, we should be able to win more of that type of business because our ability to backtest, to do simulations on different types of methodologies and then deliver that for the clients will be orders of magnitude faster than in our previous environment.

Manav Patnaik, Business and Information Services Analyst, Barclays: Got it. And in terms of the non index new product innovation, any key

Ber Pettit, COO, MSCI: Yes. Look, I think we’re bringing a lot of we will be doing a lot more things in in private markets. You saw our announcement about the private credit partnership with Moody’s, which will come online, you know, in a few later this year, maybe we’ll I would say the next three to four months probably we need to do that. We’re gonna be bringing out more private equity analysis there. We’re bringing you know, so so we’re deepening in private markets in a in a variety of ways.

We’re we’re actually doing a lot more, a variety of macroeconomic stress testing, which we actually we’ve we’ve we we had launched, I think it was at the very end of last year, but has has been great timing in analytics. So we’re able to integrate kind of macroeconomic stress testing with our traditional risk modeling, which is, you know, very huge focus for our clients now. And we’re gonna be bringing a lot more capabilities to market in climate as well. You noticed we we had announced the partnership with Swiss Re, which is about one aspect of that, But we’re doing a lot more things in physical risk in climate, expanding our our our geolocation tools. So I think just generally across the board, you know, we’re there will be more of a product pipeline than there has

Manav Patnaik, Business and Information Services Analyst, Barclays: Barry, I think last year as well, I think you talked about how you were going to pick up the new product pipeline and maybe to a certain extent, taking the foot off the gas pedal and now Yeah.

Ber Pettit, COO, MSCI: I I think we’re finally you know, look, you know, some of these things it’s so if you take the index example, and I’m just being, you know, very transparent. During this whole period that we’re reengineering the Foxbury front end into our back end, unless we hire a whole bunch more people, which we didn’t wanna do in the current circumstances, we’re taking people away from doing maybe some some other type of index innovation. So there’s a number of these type of categories. I would say to a degree, that was true also with fabric or wealth, what we now call MSCI Wealth Manager, which, again, we had a period of bringing that online, and now we’re starting to bring it to market more. So it’s look, we had a number of years where we were so massively focused during the boom period of of of the growth of ESG and sustainability where we’re basically put enormous amounts of effort on that, tons of resources, putting that into index, putting it into analytics, and we’ve just had to recalibrate the portfolio and redistribute some of the investment.

And, you know, inevitably, there’s a little bit of a period of hiatus when you say, okay, why don’t we do redeploy this capital here and start building more stuff over here or over here? And there’s a little bit of a window of a hiatus, and I think we’re getting through that. Fair enough.

Manav Patnaik, Business and Information Services Analyst, Barclays: And then just last question on the new product stuff. Obviously, it it from an expense standpoint Yeah. Does this mean we should be expecting elevated expenses or it’s

Ber Pettit, COO, MSCI: No. No. Look, I mean, I think that’s one thing, god bless us, that we’re pretty disciplined about. So we’re we’re being extremely disciplined about expenses. We’re being extremely disciplined about efficiencies.

You know, look, there there are there are some areas, let’s say, in sustainability where we’re deploying AI, where I think we’re actually gonna end up with a better quality product at a lower cost base. So we’re being extremely focused on financial discipline, you know, particularly, you know, the the the the the period of the volatility that we just went through. The only thing that I would say was the, you know, the the immediate reaction, our immediate reaction was, you know, look, we gotta be financially disciplined. You know, it’s not so much that we know what the outcome will be, but this is not a period where we can be loosey goosey. So we’ve kind of tightened that up, and we’re just, you know, big you know, so we actually had a meeting on this topic yesterday, and and we’re just saying to people, look, you know, by all means, find a way of reengineering that, but it’s gonna have to come out of the budget you have today.

So we’re being I you know, I think we’ll continue to be very disciplined. And and right now, I don’t it doesn’t feel like we’re starving anywhere for capital. I think we’re I think we’re generally happy. You know, there’s a few areas we might wanna put a bit more money into if we have a little bit more breathing space, But I don’t feel like we feel extremely excessively constrained in view of where we are.

Manav Patnaik, Business and Information Services Analyst, Barclays: Got it. Yeah. I wanna talk about the Moody’s part Sure. Before that, you know, maybe just private solutions Yes. The line item.

Can you just help us appreciate what’s in there? I mean, we all think

Ber Pettit, COO, MSCI: private credit, Yes. Yes. So look, first of all, in both sustainability and climate and in, private markets, we had two new leaders join us right at the end of last year. So Luke Flemmer from Goldman Sachs to run our private market solutions, and Richard Madison, who came from S and P, who was the founder of True Cost, to run our sustainability and climate.

So so in essence, they also which is, you know, it’s just, you know, life is tough, but such as they kind of inherited a whole we we’d had to do the 2025 budget, and we kind of gifted it to them and said, here you go. And so they obviously came on board, and they’re like, oh, okay. But I wanna change this. And so I think that was part of the, you know, some changes being done there. So so so Luke has brought in some some new leadership people, And I think that so so, so it’s a little bit of a tale of two cities.

Unfortunately, you know, we we continue to struggle with with the with the real estate side of it. And, you know, that that remains very painful, and a a fair amount of it is transaction driven in in real estate, and so that’s a little bit moribund. But in the total portfolio solutions for private markets, the Burgess business is, you know, is growing in the high teens. I think that that is our de minimis goal for it. So I think we can even do better than that.

You know, we’re we’re so the if you think about it, it his so it has been a a portfolio analysis tool for institutional LPs. Right? And so what are we trying to do? We’re trying to also make it more of a fund analysis tool for wealth LPs. Some of the largest wealth management organizations in the world are also the largest LPs.

So it’s taking the same solution and selling it to a different category of LPs. And we’re also trying to go more into so it’s basically been a fund cash flow, fund comparison, you know, and then incorporating that into your total portfolio view across all asset classes. We’re trying to go deeper in analysis of each individual asset class. So one example of that is in private credit, which is the Moody’s partnership. It’s about one thing.

We actually have some a few other things that we’re trying to do in private credit with with some other part you know, some other parties. So but we but the we wanna go deeper into the individual asset classes and provide more specific analytics for a given asset class for private credit or, you know, within private equity, you know, in buyout or in VCs. So so we will be bringing more capabilities to, for example, look at how do you think about so we will be able to put, for example, factor exposures on on equity private equity exposures, in order to compare them to public markets. We will be doing valuation type of analysis. Look.

What is the dispersion of the marks on this particular company? And then how were the valuations of that type of company comparing public markets? So a lot more analytics at the Yeah. At the at the, you know, at this at the asset class level for direct investment. So that that’s kind of the thing that we’re gonna be focused on.

Manav Patnaik, Business and Information Services Analyst, Barclays: And then specific to the most recent Moody’s partnership Yes. Help us appreciate what you’re contributing, what they’re contributing Sure. And and how that works.

Ber Pettit, COO, MSCI: So so so in essence, you know, in simple terms, they are obviously so to be clear, we’re not providing we’re not together providing an official credit rating. Right? So we’re not in the we’re not that’s a whole regulated area. We’re not providing an official credit rating. But what we are, you know, what we are doing is providing things like default probabilities and other types of, you know, credit analysis.

And in essence, what they’re doing is they’re providing the credit modeling, which they have, by definition, a lot of experience in, and, otherwise, they wouldn’t be who they are. And we are providing a a lot of the precisely that underlying data on the transactions, etcetera, that we have directly from the investors in our in our in our private markets database. And it’s also been a, you know, a great category for us to apply for on the on our data side, the use of AI has made it enormously more efficient to do that. That goes to the point about is cost going to expand. You know, we we we’ve taken a category where quite literally, like, last September, October, we had no use of AI.

And with AI, we’re able to read thousands of documents, parse them, and then present that data to an analyst in a way that is, you know, enormously more efficient. In the absence of us doing that, we wouldn’t have been able to do this Moody’s partnership. So it’s basically Moody’s analytics and our data to provide insights to people who are holders of private credit portfolios.

Manav Patnaik, Business and Information Services Analyst, Barclays: Got it. Yeah. And and just take a step back, the first partnership that you had with them more on the ESG side. Yeah. It was How’s that going?

Ber Pettit, COO, MSCI: Yeah. So so basically, the the the distinction there is in the first partnership, they basically they they they had a they were a provider of ESG analytics, which was not going that great. So so we basically replaced them. So it was a kind of a different type of deal. They they were they they, you know, crudely, you could say, we got a new form of ESG distribution, and they got a solution that helped their p and l because what they were doing was not doing great there.

So that that was so that was more of a point in time. And then in turn, we took some of their, their private company data on a long tail of small companies, and we applied some, what I would call, high level, ESG analysis to it. But it but but whereas so in a strict sense, the first deal was more like two two transactions, you know, one which was a little bit more in their interest and maybe one a little bit more in ours, whereas this is truly a strictly speaking a partnership. We are building a product together, and then, you know, it will be a joint IP product. So it’s it’s building a new thing together, whereas the previous deal was more an exchange of data for two different use cases.

This is this is truly a joint product and, you know, joint IP. Okay. So that’s exciting.

Manav Patnaik, Business and Information Services Analyst, Barclays: And and yeah. I mean, the partnership makes sense. And maybe just one more question on the partnership Sure. Looking ahead Yes. Isn’t perhaps the biggest opportunity between the two of you on the indexation side with their data.

Is that is that what the vision is?

Ber Pettit, COO, MSCI: Yeah. Look, I I think there’s I think there’s a number of things. Right? I think we’re we’re we have an open mind, you know, in in all these type of partnerships where we can go in combining our intellectual property. I think we wanna we typically wanna make sure that we do each thing that you know, well, that we have a good outcome.

This one is gonna take quite a lot of focus. But I you know, going both to the Moody’s and the Swiss Re case, you know, going you know, it’s a little bit of a cliche, but, you know, MSCI started in in Geneva in 1969. So, you know, we always say that we wanna be the Switzerland of our industry, right? We wanna be a neutral party. We wanna we wanna try to have as many partnerships and alliances as we can, and so we’ll continue to try and do that.

Manav Patnaik, Business and Information Services Analyst, Barclays: Got it. And maybe just on that, I was going to ask it later, but the partnership angle, you guys have always talked about being good at MP and A. Moody’s Swiss Re is a great example. But is there M and A aspirations as well?

Ber Pettit, COO, MSCI: Look. We, you know, we we did a fair number in the last year or so. As I mentioned, you know, whenever you whenever you do these, you have to be conscious that they also have the the the proof of the pudding is in the integration and the marketing. Right? So it’s a little bit like the the Fox Berry example that I was giving just a few minutes ago.

So I I think the the short answer is we do wanna do more of those kind of smaller smaller bolt on acquisitions that we can add value. I think we we need to pace ourselves a little bit because, you know, there is a little bit of a risk that you’re trying to do too many of these things at once can slow you down. So but I think we definitely have an open mind. There’s a few things that we’re looking at right now, you know, which may or may not pan out, but, you know, we’re looking at a few different things right now in, you know, in index and analytics. So we we keep an open mind.

And and I think, look, one one thing about the current environment, if it becomes a little tougher for some private companies, that’s not necessarily a bad thing for us, and there could be opportunities for us to to do some smaller bolt on m and a.

Manav Patnaik, Business and Information Services Analyst, Barclays: Right. Yeah. Maybe just one question specifically in analytics. Sure. You know, the the run rate obviously has been trending nicely Yes.

Higher the higher end of mid to high single digits. I know revenue, there was some accounting nuance. Yes. But any anything particular in there that’s driving that higher growth? Are you taking share from competitors?

Has that dynamic changed?

Ber Pettit, COO, MSCI: Look, I I I think we we’ve done well. So maybe two things. In purely in equity analytics, we’ve done pretty well notably with, you know, with with some of the newer segments like, you know, we’ve done well with hedge funds. We’ve done well with banks and broker dealers. So so I think, you know, we’ve we’ve and we will continue to we’ve brought you know, I I mentioned that we have, you know, kind of a next generation of models which are incorporating a little more sort of AI driven the ways if you think about it, we have the fundamental factor models which have the traditional exposures, value growth, and all of that.

And we’re using AI to basically look at clusters of returns, which may be a little more volatile or more transient. But, you know, that product is sold extremely well to more of the faster money segments, hedge funds, the or or or or the sell side. So that’s an example of an area where we’ve innovated. We’ve brought some new products to market, and we and we’ve got, you know, good returns out of it. I think we’re also and look.

This is an oil tanker rather than a speedboat, so I don’t wanna get anyone too excited. But it’s an oil tanker that’s been moving in the right direction is our credibility in fixed income continues to just steadily get better. We win more clients. We have more credibility. You know?

And and and that’s just it’s a slower burn thing, but it really helps over time. And it helps also with our our our multi asset class portfolio risk stuff. So I think there’s no fireworks right now, but I think we continue to execute reasonably well. We’re frugal with our use of capital. And so I think it will continue to be a good mixture of decent growth and very attractive, I think, margins, which are generally better than most comparables in the industry.

Got it.

Manav Patnaik, Business and Information Services Analyst, Barclays: Yeah. You renamed your ESG and climate business to sustainability Yeah. Climate. Yeah. You know, just some context on Yeah.

Why they’re renaming? And then as a follow-up, you know, I think from our end, it feels like, you know, at least the word ESG is dead.

Ber Pettit, COO, MSCI: Yeah. Yeah. So look, I think, you know, candidly, I’m not a big fan of acronyms anywhere. And I’ve actually kind of always going around trying to whack acronyms on the head. Everywhere they show up, we have a lot of internal acronyms.

So I think it was always an an inelegant acronym. And it’s also so so so then it became kind of not the best thing to put on a product. And I think the concept of sustainability is broader. I think it genuinely is broader, and I think that the notion of sustainable investing So I wouldn’t read too much into it, but I think we’re basically saying this is a broader category, and it will continue to, you know, change and adapt over time.

Got it. Yeah.

Manav Patnaik, Business and Information Services Analyst, Barclays: And and any, you know, to just for our help, like Yeah. Your discussions with your clients Yes. On the ESG side. I mean, you’re still growing. Obviously, it’s a lot.

And then just in context of Yeah. You know, you were going to reset your long term target. Yeah. Just some

Ber Pettit, COO, MSCI: so okay. So maybe just generally, and I I used this analogy in a previous meeting and there were one or two people here who have to hear it twice. But, you know, the I do think there is a strong, what I would call, Carney Albanese effect going on. Right? So what is really striking, and I was discussing this with a client yesterday, is there are a lot of institutional investors globally in all countries, including The United States, who are very strongly reacting to the current, you know, noise coming from Washington DC.

Right? And and we’ve heard this across the board. Actually, New York City Controllers has made some public statements about this, the large California funds, certainly in Canada, across Europe. So I think we are hearing many large institutional investors across the world want to re you know, restate their focus on sustainable investing. And and we have been unequivocal in our commitment to this.

So I think what that means is we you know, our belief is we can be we well, we are, I think, objectively, but we are committed to be the leader in this category. Right? And and so then you say, if the emphasis a number of years ago was heavily on ESG ratings, I think the emphasis will go more towards climate and more towards physical risk in climate and more towards looking at a variety of climate related risks in portfolios. So I think the sum of all of that is the category is important to us. We will we we’re continuing to efficiently using AI, invest in it to make it, you know, high quality and transparent.

We’ll continue to do things like Swiss Re, and we believe that there are very, very large pools of capital in the world who will continue to be focused on this, and we think we’ll be the leader in serving them. And then political noise will come and go, and hopefully, we’ll get through that.

Manav Patnaik, Business and Information Services Analyst, Barclays: So so it sounds like you’re still thinking it’d be an above company kinda growth rate, but Yeah. You don’t you don’t wanna set that long Yeah. No. I

Ber Pettit, COO, MSCI: I mean, we haven’t well, look, we’re not we’re not revising the number yet. As I said, we had a we had a new leader who came in. You know, he’s only been in the seat a few months. So we didn’t wanna sort of have him come in and then, like, having just revised the target or put a different number on his head. So we’ll we’ll we’ll have to make a more kind of official statement about that at some stage.

But for now, we’re just carrying on with, you know, those numbers. Okay. Yeah.

Manav Patnaik, Business and Information Services Analyst, Barclays: I guess we’re out of time. So just one rapid fire question. Yeah. Arsenal TSG score today.

Ber Pettit, COO, MSCI: Yeah. I was gonna say two one arsenal, but then that means penalties. So I don’t know. We’ll see.

Manav Patnaik, Business and Information Services Analyst, Barclays: But We’ll start with that. Alright. Thank you

Ber Pettit, COO, MSCI: very

Manav Patnaik, Business and Information Services Analyst, Barclays: much, Ben. Thank you, everybody.

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