MSCI

MSCI builds the indexes thousands of funds are benchmarked against, plus the risk tools and sustainability data managers use daily. The model is almost entirely recurring: 97.3% of fiscal 2025 revenue, of which 72.7% is annual subscriptions billed in advance and 24.6% is fees assessed on assets under management in products linked to its indexes.

What protects the business is not the quality of its indexes, it is the cost of changing your unit of measurement. An ETF tracking an MSCI index cannot switch without amending its documents, notifying holders and breaking the continuity of its own track record. The historical performance itself becomes an MSCI asset.

Return on invested capital was 45.5% in 2025, operating margin 54.7% and rising since 2022. This is the advantage we rate most durable in the book, and the only one we see widening rather than merely holding.

The flaw is concentration. BlackRock alone is 10.8% of revenue, and large managers face compression in their own fees — which pushes them either to renegotiate or to build indexes in-house. MSCI says so in its risk factors. A single client can therefore bend the thesis.