MSCI, Inc. (MSCI) Morgan Stanley Services Summit May 8, 2012 8:10 a.m. ET Executives Henry Fernandez - Chairman & CEO David Obstler – CFO Edings Thibault - IR Analysts Suzi Stein - Morgan Stanley Presentation Suzi Stein - Morgan Stanley
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Suzi Stein - Morgan StanleySo there’s obviously then an evolution from data to analytics. What do you think the next step is in terms of growth for MSCI? Where do you see the company headed? Henry Fernandez I think it’s all of the same which is more data. We have an immense repositories of data within our company. For example, more than half of the underlying positions of the largest hedge funds in the world are sitting in our databases for us to be able to aggregate and the like and create new products around that. Every piece of data is proprietary to the hedge fund client and in aggregate we could be able to use it in a lot of different means. So that’s an example of more data usage that over time can become available. More analytics, because technology is option that will be able to help us leverage the solutions, investment solutions on the models and the data that we provide and can embed those processes in our clients’ internal universe and therefore we’re going to see a lot more of technology being used as well. Suzi Stein - Morgan Stanley One of the few things that we are going to focus on today is differentiation and can you talk about how – what differentiates MSCI from competitors on both the analytics side and on the index side? Henry Fernandez The first and foremost, we are in the business of creating standard. So standard for measuring performance, for measuring equity portfolio risk in the form of Barra, Barra tracking error or Barra risk numbers. We are in the business of measuring standards or creating standards on multi-asset class risk portfolio with RiskMetrics. We for sure are the standard for voting practices with ISS. We are now trying to create a standard with ESG, environmental, social, governance criteria for investment portfolios. So that’s what we – that’s our first differentiating factor.
After that, and those standards by the way are branded. So English is a standard but it’s not MSCI branded, at least not yet, right. So GAAP is a standard but again it’s not branded and the like. So therefore we are fortunate that we have branded standards but you will have to back them up with service, with quality of products, with innovation, with enabling technology that is going to be able to help our clients’ investment processes.Suzi Stein - Morgan Stanley What about particularly on the analytic side, what are you seeing as far as competition and what are you doing there to really distance yourself from competition? Henry Fernandez Competition always exists in one way or another. It’s always been in our universe of companies and products from their inception. I think for us more important than competition is to focus on the needs of those clients around the world that we have and the prospects that we can get, and be able to come up with the solutions to what they are looking for. And our business is a rapidly evolving business. The needs of our clients are evolving quite dramatically. If you think about Europe right now, many of our clients will plug in their sovereign bonds that’s AAAs and forget about it in the context of credit risks and all the kinds of risks. That’s no longer the case. So we’ve got to develop new models that are going to be able to take those pieces into account. So these are evolving and therefore we stay very focused on serving those needs. You don't have to worry about competition. It's always going to be there but the clients are going to follow you and your products and services. Read the rest of this transcript for free on seekingalpha.com