The term 'MSCI' is included in the Investments edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Choose your edition here...
MSCI refers to an investment research company that is well known around the world. The firm is most famous for producing indices on a range of international stocks and benchmarks for other countries outside of the United States. It also engages in ascertaining performance analytics and portfolio risk. The company delivers tools for governance to hedge funds and institutional investors as well.
Besides this, MSCI offers its many clients a range of investment tools which they obtain from its market partner Barra that engages in financial engineering. Barra also offers institutional shareholder services and risk metrics. MSCI partners with Measurisk and its Center for Financial Research and Analysis as well. MSCI’s most internationally acclaimed services though are their globally followed indices which the investing public from around the world can easily access.
Though MSCI was for years a division of Morgan Stanley the investment bank and brokerage firm, it no longer is. The now-independent company trades publically via the nation’s most prestigious stock market exchange, the NYSE New York Stock Exchange. It was in the late 1960s that MSCI began to offer its now world famous indices. In fact the Capital International indices that it first purveyed back in 1969 became the very first international stock market indices for those markets which lay outside of the United States.
Among the investment research firm’s best-known and most followed products today is the MSCI EAFE index. This particular index tracks the stock markets’ results in nearly two dozen different economically developed nations of Europe, the Far East, and Australasia. This index has become probably the most widely followed benchmark for the aggregate international stock market (excluding the United States).
This region of Europe, Australasia, and the Far East is known as the best developed and wealthiest areas of the world geographically (excluding the United States and Canada). They are most often known by the acronym EAFE. A huge range of mutual funds and ETFs Exchange Traded Funds concentrate their endeavors on making investments in firms which are headquartered and have operations in these parts of the globe.
MSCI actually stands for Morgan Stanley Capital International. It was Morgan Stanley which originally founded the firm that now dominates international stock market indices’ benchmarks such as these. Morgan Stanley was interested in effectively representing the mid to large capitalization companies in this Europe, Australasia, and the Far East regions. This particular index includes about 85 percent of the total market capitalization companies (on a free floating adjusted basis) in all of these nations within its index.
The countries in the EAFE region and index include all of the following: the United Kingdom, Switzerland, Sweden, Spain, Singapore, Portugal, Norway, New Zealand, the Netherlands, Japan, Italy, Israel, Ireland, Germany, France, Finland, Denmark, China, Belgium, Austria, and Australia. There are 927 different companies represented in this index at time of publication.
The top ten holdings as of July 2017 were as follows (in this order): Switzerland’s Nestle and Novartis, the U.K.’s HSBC, Switzerland’s Roche Holdings, Japan’s Toyota Motor Corporation, the U.K.’s British American Tobacco, Britain and the Netherland’s Royal Dutch Shell, France’s Total, the United Kingdom’s British Petroleum, and France’s Sanofi.
Thanks to the various indices proffered and maintained by MSCI, investors now have effective ways to invest in the economically developed nations of the world when they want to invest outside of North America (the United States and Canada). Though MSCI does various other lines of business in risk analytics, risk management and investor services (especially for the larger institutional investors), it is in this arena of international investment benchmarking that they really shine.