The Intrinsic Value Podcast - The Investor’s Podcast Network

TIVP043: MSCI (MSCI): The Financial Giant Enabling Passive Investing w/ Shawn O’Malley & Daniel Mahncke

39 snips
Oct 26, 2025
Shawn and Daniel explore the pivotal role of MSCI Inc. in global financial markets, highlighting how its indexes have become essential for tracking stock performance. They discuss MSCI's relationships with major asset managers and the impact of passive investing. Key concerns like fee compression and competition from direct indexing are analyzed, alongside MSCI's unique business model and profitability. The challenges and growth potential for MSCI are weighed, culminating in a cautionary perspective on its current valuation.
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INSIGHT

MSCI Is The International S&P

  • MSCI functions like S&P for international equities, becoming the go-to standard outside the U.S.
  • Its index dominance creates a toll‑road business with high margins and strong compounding potential.
INSIGHT

Index Royalties Are Highly Profitable

  • MSCI earns recurring royalties from asset managers who benchmark funds to its indexes.
  • The index business is asset‑light with minimal ongoing R&D or CapEx, boosting margins.
ANECDOTE

How MSCI Originated From Morgan Stanley

  • MSCI traces back to Morgan Stanley buying Capital Group's international index data in 1986 and formed MSCI.
  • The company IPO'd in 2007 and now claims roughly 300,000 indices across asset classes.
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