MSCI is one of the world’s leading providers of indices, portfolio analytics, and data to the investment management industry. Its flagship index business earns recurring subscription fees and asset-based fees tied to the trillions in AUM benchmarked to its indices, giving it a unique royalty-like exposure to the growth of passive investing. The business is highly recurring (95% client retention), asset-light, and generates industry-leading margins. AI is increasingly working in MSCI’s favour, with management crediting it for accelerating product development and improving client service. This dynamic remains underappreciated by the broader market, and we expect it to support MSCI's growth moving forward.

MSCI is one of the world’s leading providers of indices, portfolio analytics, and data to the investment management industry. Its flagship index business earns recurring subscription fees and asset-based fees tied to the trillions in AUM benchmarked to its indices, giving it a unique royalty-like exposure to the growth of passive investing. The business is highly recurring (95% client retention), asset-light, and generates industry-leading margins. AI is increasingly working in MSCI’s favour, with management crediting it for accelerating product development and improving client service. The market is now appreciating the opposite dynamic at work, recognizing AI as a source of upside rather than a risk.

MSCI Inc. is mentioned as one of the top five positions in the portfolio, which includes companies that possess significant competitive advantages due to irreplaceable assets, strong brand awareness, technologically superior industry expertise, or exclusive data integral to their operations. The manager notes that these businesses cannot be easily duplicated and have large market opportunities to penetrate further, enhancing their potential for superior earnings growth and shareholder returns.

MSCI Inc. is mentioned as part of the Fund's holdings, but there is no explicit directional argument made about its future performance or valuation. The letter discusses the overall performance of the Fund and its strategy without providing specific insights or opinions on MSCI Inc. itself.

MSCI is positioned to benefit from the transformative impact of AI, as it owns industry protocols that are deeply embedded in regulatory frameworks and contractual relationships. The manager believes that AI does not displace these moats but rather reinforces them, suggesting that MSCI's revenues are likely to become more valuable over time as AI increases economic growth and capital markets activity. Additionally, the potential for AI to enhance workforce productivity could improve MSCI's cost structures and profit margins, making it a compelling investment.

MSCI Inc. is mentioned in the context of the Fund's performance and stock selection. The letter notes that the Fund's positive stock selection offset significant headwinds from certain style factors, including Beta and Momentum, and that MSCI’s Barra factor attribution played a role in this. However, there is no explicit bullish or bearish argument made regarding MSCI Inc. itself.

MSCI Inc. is mentioned in the context of the portfolio's performance, but there is no explicit directional argument made about the company's future prospects or valuation. The letter lists MSCI Inc. among other holdings without providing a specific thesis or rationale for its inclusion.

We believe that MSCI Inc. epitomizes the attributes that we search for when allocating capital in the Fund. This business boasts characteristics such as a large and growing addressable market, favorable secular trends, and high and growing barriers to entry. MSCI has developed an exemplary business model with durable revenue growth prospects, leverageable margin structures, and robust free cash flow conversion. We are optimistic that investors will eventually recognize the attractive opportunities that MSCI offers, leading to higher valuations and compelling returns for the Fund.

We initiated a position in MSCI Inc. MSCI Inc. is a financial technology company that serves asset owners, asset managers, and other financial intermediaries. We believe that MSCI is a unique, high-quality business, anchored by its indexes, which are the standard for measuring the performance of global and international equity markets. Importantly, organic growth at MSCI requires minimal capital investments, so margins are high and free cash flow is robust. Overall, we believe that MSCI has a long runway for growth as it’s well-positioned to capitalize on secular industry trends.

MSCI is recognized as the leading provider of financial markets infrastructure, which includes global equity indices and risk analytics. The company is well-positioned to benefit from the ongoing growth in global markets, particularly as it continues to enhance its offerings in risk analytics. The addition of MSCI to the portfolio reflects our confidence in its ability to leverage its market position and deliver sustained growth in a competitive landscape.