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Credit Suisse 15th Annual Global Services Conference

March 12, 2013 5:00 pm ET


Robert Qutub - Chief Financial Officer and Principal Accounting Officer


Georgios Mihalos - Crédit Suisse AG, Research Division


Georgios Mihalos - Crédit Suisse AG, Research Division

Okay. So we're ready to begin. Our next presenting company is MSCI. We have with us here CFO, Bob Qutub; and also up here on the stage is Edings Thibault, who heads the IR efforts at MSCI.

With that, Bob, I will turn it over to you.

Robert Qutub

Thanks, George.

Georgios Mihalos - Crédit Suisse AG, Research Division

All right.

Robert Qutub

I appreciate the opportunity to talk to you today. So before I begin to describe our business, let me start by giving you just a few key principles of how we manage our company. One, we're focused on providing mission-critical investment decision support tools for major asset classes to institutional investors worldwide. And two, we're focused on growth. And our goal is to deliver attractive top and bottom line growth through the cycle.

Here you see our strategy. To deliver that growth is it's predicated on building a network of investment decision support tools that provide incremental insight about risk and return for all single-asset and multi-asset class investors. To build tools for multi-asset class investors, we need the best-of-breed in each asset class. We are tying these tools together, not only across asset classes, but linking the front office performance tools with the traditional middle office view of risk, giving our clients a single system that does both.

Our -- also integral to our growth strategy is our goal to build tools that can provide transparency about risk and return, not only across portfolios with any single asset manager, but also across the institutional client network. A great example of this is index. One of the primary use case of an index is to serve as a benchmark of return so that pension fund can measure the performance of an asset manager. That kind of transparency and linkage within our network of client serves to entrench us in their investment processes. We think this strategy is supported of what we see are long-term trends. Financial markets are becoming more integrated, both globally and across asset classes, increasing the complexity our clients face.

Clients and regulators are demanding more transparency, both internally across portfolios and externally between managers. At the same time, the cost of processing data is falling fast, which will drive innovation and increase the value of unique data sets.

All of these factors are driving underlying demand for tools, which can provide insight and linkage around performance and risk with single-asset class and multi-asset class investors and managers. These same factors are also driving our need to invest, both organically and via acquisitions. And when I say acquisitions, I'm talking about accelerating technology or bolt-ons, not transformational.

The last key element of our strategy is to leverage our common platform, when possible, to maximize the value we deliver to our clients and to our shareholders. Simply put, we seek to build our tools using common data and analytic sets, common technology platforms and by leveraging the breadth and depth of our coverage to bring incremental insights to our clients at the lowest possible cost.

Our leadership position in the marketplace is as a result of more than 40 years of innovation. Each of our major product lines and brands, whether it's MSCI, Barra, RiskMetrics, ISS, IPD, were all early pioneers in their fields, and you can see here from the timeline, starting with the Capital group, all the way to the rise of ISS. This is MSCI Inc.

Our strategy is to build a broad network of tools that spans our client's single-asset class and multi-asset class portfolios, providing a deep understanding of risk and return. These tools provide insights about portfolio performance, performance attribution and construction. They provide important information for measuring and reporting risk in those same portfolios. And they help our clients better understand some of the nonfinancial risks surrounding governance or other social issues.

As you can see, we have built or acquired a wide range of performance and risk tools, ranging from equity indices, portfolio construction tools, performance attribution tools for a full range of asset classes, including equities and real estate, and we also have proxy voting tools and others.

On the risk side, our tools enable investors to better understand equity risk, multi-asset class risk, position level risk within their portfolio of hedge funds and much more.

Over time, we are linking these tools together, bringing together the front office view of performance with the middle office view of risk to enable our clients look at risk and return through a common set of data and analytics.

Another key part of our strategy is to build tools that create transparency between asset owners, asset managers, hedge funds, banks and exchanges. By building these links between our clients, we create a network effect that leads our tools more deeply embedded in their investment processes. The most obvious example of this is in our index product line, with more than 95% of all U.S. pension fund assets invested in international equities are benchmarked to MSCI indices. We have become a critical tool for asset managers to explain their performance to asset owners.

To a lesser extent, our risk management and equity performance attribution tools enjoy a similar kind of support within the network. Our deep tools -- our deep links to our broad customer base is one of our key assets. Our clients are the premier investment organizations: asset managers, hedge funds, banks, pension funds, sovereign wealth funds, and corporate clients from around the world. We believe we are unique among our peers in terms of the breadth of our relationships with this full range of institutional investor ecosystem. We have built an understanding about the needs of our clients.

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