MSCI is a provider of stock indices such as MSCI World, ACWI and Emerging Markets, also risk analytics, and ESG ratings. It used to be part of Morgan Stanley, but it is now a completely separate company.
This article will discuss what MSCI is, what are MSCI ETFs, and how the company makes money. This article is intended for educational purpose only, and not a financial advice.
What MSCI stands for and who owns it
MSCI used to stand for Morgan Stanley Capital International, and today it only goes by the name "MSCI", since Morgan Stanley sold its last remaining stake in 2009. MSCI is an American finance company, which provides services such as stock market indexes, data, and analytics.
The history of MSCI started when Capital International released indices covering global stock markets, for people outside the U.S. market. In 1986, Morgan Stanley licensed the indices, and rebranded it as "Morgan Stanley Capital International". Today, MSCI is an independent public company, and not a part of Morgan Stanley.
To avoid confusion, you can take a look at these differences:
| MSCI Inc. | An MSCI index | An "MSCI fund" |
|---|
What it is | A company that makes and sells index data, analytics and ratings | A list of stocks with a weight for each one | An ETF or index mutual fund that buys those listed stocks |
Can you buy it? | Yes, as a stock on the NYSE (ticker: MSCI) | No | Yes |
Example | | MSCI World | Any fund that says it follows MSCI World |
How MSCI makes money
Fund companies pay MSCI to subscribe and use its indexes. As per December 31, 2025, ETFs linked to MSCI stock indexes held USD 2,340.7 billion, per the 10-K. MSCI also sells risk analytics (tools that help investors measure how risky a portfolio is) and ESG ratings (scores about environmental, social and governance practices).
Some of the funds that track MSCI indices also put the word "MSCI" in its name, such as "Amundi Core MSCI World UCITS ETF" or "iShares MSCI Emerging Markets ETF", but they are not required to do so.
Examples of MSCI indexes
Index | Scope | Data on MSCI fact sheet |
|---|
MSCI World | Developed markets only (23 countries) | 1,249 companies; covers about 85% of the investable stock market in those countries (Sep 30, 2026) |
MSCI ACWI (All Country World Index) | Developed plus emerging markets | 23 developed and 24 emerging markets; 2,414 companies; about 85% of the global investable opportunity; US 64.21%; top 10 holdings 25.40% (Sep 30, 2026) |
MSCI Emerging Markets | Emerging markets only (24 countries) | 1,178 companies (Jun 30, 2026) |
MSCI EAFE | Developed markets outside the US and Canada (21 countries). EAFE means Europe, Australasia and the Far East. | 672 companies; Japan 23.32% and the UK 14.72% are the two biggest countries (July 31, 2026) |
MSCI Frontier Markets | Smaller, harder-to-reach markets that are less developed than emerging ones | (Check the current MSCI fact sheet for the latest numbers) |
Notice that the dates differ, because MSCI publishes each fact sheet on its own schedule. These figures change every month, so remember to check the fact sheet before you quote them.
How to read an MSCI index name
When looking at indices names from MSCI, anyone could get confused. Here are some rules of thumb to "decipher" them:
World vs ACWI: World means developed countries only. ACWI means developed and emerging countries together.
ex USA: "ex" means "excluding", so "ex USA" leaves out the U.S.
Standard vs IMI vs Small Cap: "Standard" holds large and mid-size companies. "IMI" (Investable Market Index) adds small companies. "Small Cap" holds only small companies.
Net vs Gross: "Net" takes off the tax that some countries hold back from dividends paid to foreign investors. Gross does not. Both show returns including dividends.
For example, an index named "MSCI ACWI ex USA IMI" means that the index is made by MSCI, covering all sizes of companies in developed and emerging countries, except the U.S.
How MSCI decides which stocks go in
MSCI weights stocks by free float-adjusted market cap. Market cap is the total value of all a company's shares. "Free float" here means that MSCI only counts the shares that regular, retail investors can actually buy. This means that the market cap does not include shares owned by a founder, a government or other big owners. As a result, a company with a big controlling owner gets a smaller weight compared to its actual, full value.
According to MSCI's very own methodology summary (July 2006), each market is covered in layers, named Large Cap, Standard, and IMI.
Layer | Target share (free float-adjusted value) |
|---|
Large Cap | about 70% |
Standard (large plus mid) | about 85% |
IMI (large, mid and small) | about 99% |
The index is dynamic, and MSCI runs an Index Review every quarter in February, May, August and November. It also makes changes between reviews when something big happens in the market, such as a large IPO.
Example: How free float changes weighting
Let's say, there are three fictional companies with different floating share percentages. See how this affect the weighting in an MSCI index:
Company | Full market cap | Free float | Free float-adjusted cap | Index weight |
|---|
Alpha Co | USD 400 billion | 100% | USD 400 billion | 64.5% |
Bravo Co | USD 600 billion | 20% | USD 120 billion | 19.4% |
Charlie Co | USD 200 billion | 50% | USD 100 billion | 16.1% |
Total | | | USD 620 billion | 100% |
Bravo Co is the biggest company on paper, but since only 20% of its shares are available to the public, it drops to second place. You want to keep this in mind when reading data related to MSCI indices.
Classification: developed, emerging or frontier
MSCI classifies each country's stock market into a group, using three tests from its Market Classification Framework (June 2026).
Criterion | Question | Requirement |
|---|
Economic development | How rich the country is (only for Developed status) | Income per person (GNI per capita) at least 25% above the World Bank's high-income line for three years in a row |
Size and liquidity | Are there enough companies, big enough and easy enough to trade? | At least 1 qualifying company for Frontier, 3 for Emerging, 5 for Developed |
Market accessibility | How easy it is for foreign investors to get in and out | Open, well-run markets for outside investors |
MSCI reviews this once a year, and results come out each June. The latest decisions: Greece moves up to Developed and Bulgaria is added as Frontier, both effective with the May 2027 review.
Why index providers can disagree
Each index company makes its own rules, so the same country can land in different groups. South Korea is the best-known case. MSCI calls it an emerging market. S&P Dow Jones Indices says it has treated Korea as developed since 2001, and FTSE Russell moved it to developed in 2009. The result: a Korean stock can sit inside an emerging-markets fund from one index family and a developed-markets fund from another.
Why MSCI decisions can move stock prices
This is about how markets work, not a trading tip.
The index effect. Research on MSCI country indexes in 29 countries (Chakrabarti and co-authors, 2005) found that stocks added to an index tend to rise after the news and up to the day the change takes effect. Part of that gain fades later. Stocks removed tend to fall.
The benchmark effect. When an index changes how much weight a country or stock gets, funds that follow or compare themselves to it shift their money. That moves capital and prices, not just on announcement day but when the change takes effect (Raddatz, Schmukler and Williams, 2017).
These effects differ by market and time period. They are not reliable enough to count on.
How investors use MSCI indexes, and what to check in a fund that tracks one
People use MSCI indexes in two ways:
As a benchmark. A score to compare your portfolio against.
As a shopping list for index funds and ETFs. The fund buys what the index holds.
You cannot invest in an index directly. You can only buy a fund that follows it. Before you pick one, check:
The exact index. MSCI World, ACWI and ACWI ex USA IMI are very different.
Costs. The yearly fee the fund charges.
Tracking error. A fund's return can drift away from its index (FINRA explains how). Smaller drift is better.
Concentration. One country or a few stocks can dominate. In ACWI, the US is 64.21% and the top 10 holdings are 25.40%.
Currency. If the fund holds foreign stocks, exchange rates affect what you earn.
FAQ
What is MSCI, and what does MSCI stand for? It originally stood for Morgan Stanley Capital International. It is a company that builds stock market indexes, risk analytics and ESG ratings.
Is MSCI owned by Morgan Stanley? No. Morgan Stanley sold its last stake in 2009.
What is the difference between MSCI the company, an MSCI index and a fund that tracks it? The company makes the list (the index). The fund buys the stocks on the list.
How does MSCI make money? Mostly by licensing indexes, partly through fees tied to how much money tracks them, plus analytics and ESG ratings.
What is the difference between MSCI World and MSCI ACWI? World covers developed countries only. ACWI adds emerging countries.
What do IMI, Standard, ex USA, Net and Gross mean in an MSCI index name? IMI includes small companies, Standard is large and mid only, ex USA leaves out the US, Net returns are after dividend withholding tax, Gross are before it.
How does MSCI choose and weight the stocks in an index (what is free float)? It targets a share of each market and weights by free float, the part of a company's shares the public can buy.
How often does MSCI review and rebalance its indexes? Every quarter (February, May, August, November), plus extra changes for big events.
How does MSCI decide whether a market is developed, emerging or frontier? It checks economic development (for Developed only), size and liquidity, and how open the market is to foreign investors. Reviewed yearly, with results each June.
Why do stocks move when MSCI adds or removes them? Funds that follow the index must buy or sell, which can push prices around the announcement and the effective date.
Can you invest directly in an MSCI index? No. You buy a fund that tracks it.
How is an MSCI index different from the S&P 500? The S&P 500 is made by S&P Dow Jones Indices and covers about 500 large US companies. MSCI World covers developed markets around the world, and ACWI adds emerging markets.
What should I check before choosing a fund that tracks an MSCI index? The exact index, costs, tracking error, concentration and currency.
Is MSCI also a stock you can trade? Yes. MSCI Inc. is listed on the NYSE under the ticker MSCI.
This article is for education only and is not investment advice.
Sources
