MSCI reported total ETF and non-ETF AUM linked to their indices reached $7 trillion, with record inflows into ETF products in Europe. Asset-based fees continue to be a strong contributor to revenue. Analytics had a strong quarter, while Private Capital Solutions saw 86% recurring sales growth.
Sales in Sustainability and Climate were lower, with focus on expanding solutions across all client segments. MSCI is emphasizing physical risk and energy transition tools. AI is leveraged to enhance solutions in custom indices, risk insights, ESG controversies, and private assets.
MSCI is unlocking opportunities across high-growth client segments, with 13% subscription run rate growth in hedge funds and 26% recurring sales growth. Wealth managers saw 11% subscription run rate growth globally, including 15% recurring sales growth, driven by adoption of index and analytics tools.
Asset owners experienced close to 11% subscription run rate growth and strongest recurring net new sales growth in 5 years. Demand is rising for total portfolio solutions spanning public markets, multi-asset classes, and private markets. MSCI posted over 9% subscription run rate growth with banks and broker-dealers, securing a landmark deal for their new basket builder solution.
Active asset managers saw recurring net new sales growth of 13%, primarily driven by index products. MSCI supported the launch of over 50 new active ETF products in 2025. The company is well positioned to benefit from AI, accelerate innovation, and drive adoption of products across client segments while delivering EPS growth for shareholders. MSCI extends ETF agreement with BlackRock through 2035 to support future growth, lowering fee floors for certain superscale ETFs. Analytics sees over 8% subscription run rate growth in Q4, driven by enterprise risk and performance tools. Private Capital Solutions sees accelerated growth, with almost $8 million in new recurring subscription sales in the quarter.
Real Assets experiences almost 6% run rate growth, while 2026 guidance reflects expense outlook and powerful operating leverage benefits. Capital position remains strong with over $515 million in cash balance at the end of December. MSCI focuses on delivering integrated solutions and meeting client needs across various segments.
MSCI aims for fully integrated company where each product line benefits from and contributes to the others. Baer Pettit, President of MSCI, announces retirement on March 1, recognized for critical role in company’s success. Henry Fernandez looks forward to working with new business partners to continue MSCI’s momentum and deepen client relationships. Baer Pettit, President of MSCI, steps down after 25 years, noting mixed emotions but gratitude for leading the firm’s growth and impact on the investment industry. Q4 results highlight MSCI’s resilience and ability to reinvent itself, creating shareholder value and driving innovation through client-focused teams.
MSCI’s evolution into a multi-asset class provider is credited to organic investments and acquisitions, with talented teams continuously seeking new opportunities to drive client value and growth. The firm’s value to clients and shareholders is evident in its public and private markets capabilities, creating opportunities across global client segments and ensuring long-term success.
Baer Pettit expresses confidence in MSCI’s future value creation for clients, shareholders, and employees post-retirement. The firm’s strong combination of public and private markets capabilities, along with AI integration, promises continued growth and innovation. Analysts, like Toni Kaplan from Morgan Stanley, inquire about the impact of AI on MSCI’s growth rate and client adoption, with Henry Fernandez highlighting AI’s role in enhancing operations, product insights, and custom index creation. The application of AI at MSCI is still in its early stages, but the company is excited about the potential. International flows are shifting away from the U.S., leading to increased interest in non-dollar assets and MSCI equity indexes. Strong growth is seen in Europe and Asia Pacific, with a positive outlook for the future.
Private assets at MSCI had their best quarter, with encouraging trends in total plan offerings and transparency offerings. Sales growth is strong in the Americas and EMEA, showing positive momentum in key areas the company has been investing in. The outlook for private assets is positive, with continued growth expected. A strong product development pipeline is driving significant client interest in new capabilities and content sets, including Document Management and SourceView offerings. AI is enabling expanded capabilities and insights for clients. Asset and deal level metrics, private capital indexes, and strong partnerships are positioning the company for continued growth in the market.
Positive signs in the real estate industry include rising investments in commercial sectors like office and retail, with double-digit growth in some areas. Private capital is flowing back in, driving early movement in new products like Index Intel and data center offerings. The company sees attractive opportunities and strong momentum moving forward.
Projected free cash flow for 2026 includes $100 million in cash taxes, timing-related items, and increased interest expenses from debt issuances. Investments in new London office space, software solutions, and CapEx for software capabilities are contributing to comparison noise between 2025 and 2026. Strong cash collections and healthy top-line growth are expected to drive continued free cash flow growth per share.
Retiring executive Baer’s achievements and the strength of the company’s pipeline were highlighted during a call with analysts. The reiteration of medium-term targets and positive comments from the CFO about the pipeline’s strength indicate continued growth and opportunities ahead for the company. The company is seeing a strong pipeline and positive market momentum, with sales and growth improving in asset management. New product contributions to sales increased by 20% in 2025, creating excitement for future opportunities. The focus on innovation, client service enhancements, and market orientation is driving momentum in new and existing client segments.
In Europe, the ESG market is already showing signs of recovery, though not at the desired pace. The focus is shifting towards financial materiality in portfolios, with a consolidation of ESG data suppliers benefiting the company. Growth is expected to continue in Europe, while challenges persist in the U.S. and APAC markets. The company aims to expand its ESG/Sustainability franchise to analyze emerging risks beyond ESG, such as climate and AI impacts on portfolios. A discussion on Analytics and Sustainability costs at a recent financial earnings call revealed some cost increases due to various factors like FX and infrastructure investments. The company is focusing on AI insights and enhancing capabilities in equity analytics and multi-asset class analytics to drive growth.
During the call, the impact of tokenization on private assets was discussed as a potential catalyst for the company. Tokenization could streamline ownership transitions and necessitate tools like evaluated prices and credit risk assessments. The company sees big potential in this trend for private markets and the tools they offer.
In a recent earnings call, the company also addressed questions about the active asset manager end market. The discussion highlighted the company’s strategic investments in AI insights and enhancements across different analytics areas to drive growth and adapt to emerging risks in the market. MSCI is adapting to meet the changing needs of the active asset management industry by shifting towards ETFs and offering new product development services to clients. This strategic move aims to increase growth and profitability in a world dominated by indices and technology. AI efficiencies are also expected to drive cost savings and increase investments in innovation, accelerating product introductions and improving content consumption for clients. These initiatives are anticipated to positively impact MSCI’s growth and profitability in the years to come. Andrew Wiechmann discusses improvements in client dynamics, particularly in asset managers and EMEA, leading to better retention rates. Despite some challenges in Sustainability and Climate and real assets, overall health and engagement are improving, driven by enhancements in client service and product innovations.
David Motemaden asks about elevated cancels for asset managers in Europe impacting retention levels. Wiechmann confirms slightly lower retention rates in EMEA compared to the Americas, reflecting pressures on asset managers and M&A transactions. While retention rates vary quarter-to-quarter, the trend has been consistently higher in the Americas in recent years.
Jason Haas inquires about the strength in index recurring subscription revenue outside of asset managers. Wiechmann attributes this to the trend towards personalization and customization in the investment industry, with index products offering efficient solutions for specific investment views and objectives. Hedge funds are the highest growth client segment, with a 19% growth rate in the fourth quarter, driven by their demand for content to navigate markets effectively. Asset managers and asset owners are experiencing 8% growth, fueled by the demand for custom outcomes. MSCI is licensing more content to meet this need, with new capabilities like Basket Builder and custom indexes unlocking opportunities for clients. The company remains bullish about the future and excited about growth prospects.
MSCI’s contribution from price increases has been stable, with enhancements and innovations driving monetization. The company expects to continue increasing prices by enhancing client value through tools and services. The implementation of AI allows for greater efficiency and unlocks commercial value, supporting upsells and price increases over time.
Chairman and CEO Henry Fernandez expresses confidence in MSCI’s momentum, with a focus on aggressive selling across all client segments. The company’s new product machine and innovation mode are gaining traction, driving business performance and strong margins. The pace of innovation, product launches, and dialogue with clients are encouraging, positioning MSCI for continued success.
MSCI acknowledges the retirement of a key business partner, Baer, thanking him for his contributions, leadership, and dedication to the company. The company plans to continue growing and multiplying retirement dollars while expressing gratitude for the partnership. Participants in the conference are thanked for their participation, concluding the program on a positive note.
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Read more at Yahoo Finance: MSCI (MSCI) Q4 2025 Earnings Call Transcript