MSCI To Continue To Benefit From Globalization Of Cross-Border Platform

Analysts at William Blair & Co reiterate their "outperform" rating on MSCI Inc

. Last week, MSCI reported better-than-expected Q2 results. “Strong top-line results were driven by upside versus our model in the equity indices business, while sales from equity portfolio analytics and multi-asset class portfolio analytics were relatively in line with our expectations. Average AUM in ETFs linked to MSCI indices tracked slightly ahead of our model for the second quarter; that said, recently reported AUM results for May and June have ticked lower, which does not come as a surprise given the recent market environment,” William Blair says. The analysts add, “Management commentary emphasized that although retention rates did improve year-over-year, levels remain lower than in past years pointing to a lingering level of post-crisis caution in the client base….. International offerings tend to carry higher fees versus U.S.-focused solutions. A notable amount of the recent market volatility has been driven by weakness in international markets, leading to a better relative performance for domestic products versus cross-border offerings, which in turn has pressured the level of fees received by MSCI when compared to recent quarters. We view this as a temporary phenomenon for MSCI and expect the company to continue to benefit from the globalization of investing and the company’s dominant cross-border platform.”