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Investors, financial institutions and companies are demanding physical climate risk insights embedded directly into investment and risk workflows to inform critical financial decision making, as climate-related physical risks accelerate globally.
The integration of First Street’s data and tools into MSCI’s extensive climate and geospatial solutions will enable quantified assessments of financially relevant physical climate risk at any geographic coordinate and across more than 2 billion structures worldwide.
As of 2025, around $36trn-worth of capital was in passive investment funds. These automatically track decisions by MSCI, FTSE Russell, S&P Global and the like to determine what to buy, and how much. Many trillions more are supposedly invested actively, but by “closet index-huggers”—timid managers who fear straying too far from their benchmarks.
But markets are not perfect and index rebalancing is large enough to move them. Goldman Sachs, a bank, reckons $7.8bn could flow out of Indonesian stocks if the country is downgraded to a “frontier market” by MSCI in June. The share price of Robinhood surged by 16% in September after it joined the S&P 500 index. South Korean bonds’ entry into the FTSE World Government Bond index this year may drag in as much as $60bn-worth of foreign investment.
In two separate months last year, index-rebalancing strategies run by Millennium Management, a hedge fund, came a cropper in this way and booked losses worth hundreds of millions of dollars, snapping long winning streaks. They did so just as momentum reversed (meaning that winners began to lose and vice versa). When momentum becomes unreliable, as it has sometimes been recently, so too are index-rebalancing strategies.
Norway’s gargantuan sovereign-wealth fund has $2.3trn in assets, much of it in effect invested passively. Yet it made $4bn last year through arbitrage, including around the rebalancing of indices.
Many so-called tracker funds in truth exercise far more discretion than the label suggests. This might be necessary to avoid being the “dumb money” on the other side of index-rebalancing trades.
MSCI, which was spun off by Morgan Stanley, an investment bank, in 2007 and has a market capitalisation of $45bn, has two main revenue streams from indexing.
The first is benchmarking. It has more than 280,000 equity indices around the world that tell investors what is going on in the public markets, and provide a measuring stick against which to judge fund managers’ performance. If a fund puts all its money into small-cap Japanese stocks, for instance, and MSCI’s medium- and large-cap Japanese equity indices do better, it underperforms. Almost $15trn of assets are benchmarked in such a way globally.
The second revenue stream is enabling investment managers to create financial products, such as ETFs, based on its indices. Almost $1.5trn of ETF assets are linked to MSCI’s indices, a nearly five-fold increase in a decade. BlackRock, the world’s largest asset manager, is the biggest client. Its boss, Larry Fink, and Mr Fernandez have been kindred spirits for decades.
MSCI’s first foray into the private realm is via benchmark indices. Since 2021 it has spent almost $2bn buying two data-gathering firms that create indices for private assets, from real estate and infrastructure to private debt.
As Mr Fernandez explains, such indices enable a property investor to decide the relative merits of putting money into, for example, offices (which crashed during the pandemic) versus data centres (which soared).
And yet Mr Fernandez believes that some parts of this opaque hinterland, such as private loans, are more liquid than others. “My bet is that over time there will be the development of a secondary market for private credit,” he says.
Quarterly Earnings
2026Q2
MSCI has already launched twice as many products in 2026 as we did in all of 2024, and we are just starting to see the benefits. AI will allow us to move even faster in building new products, enhancing our existing products, and expanding our capabilities for the world’s largest financial institutions.
Cash and cash equivalents was $356.4 million as of June 30, 2026. MSCI typically seeks to maintain minimum cash balances globally of approximately $225.0 million to $275.0 million for general operating purposes.
Total principal amounts of debt outstanding as of June 30, 2026, were $6.4 billion. The total debt to net income ratio (based on trailing twelve months net income) was 4.7x. The total debt to adjusted EBITDA ratio (based on trailing twelve months adjusted EBITDA) was 3.1x. MSCI seeks to maintain total debt to adjusted EBITDA in a target range of 3.0x to 3.5x.
Total share repurchases during the quarter were $145.0 million or 0.3 million shares at an average repurchase price of $557.34.
On July 20, 2026, the MSCI Board of Directors declared a cash dividend of $2.05 per share for third quarter 2026, payable on August 28, 2026 to shareholders of record as of the close of trading on August 14, 2026.
The higher operating expense and adjusted EBITDA expense guidance reflects the impact of recent acquisitions, including First Street, as well as the strong topline momentum driven by AUM in products linked to MSCI indexes exceeding the flat market assumption embedded in the prior-quarter guidance.