MSCI

In nineteen eighty-four, MSCI created EAFE: Europe, Australia, Far East. Pension funds needed to track non-US markets. The index captured twenty-one developed markets outside America in a single benchmark. Investors adopted EAFE. Passive investing appeared. Index funds needed benchmarks. Vanguard, BlackRock, hundreds of funds tracked EAFE. Every dollar flowing into passive investing paid MSCI a toll. MSCI did not manage money, take risk, or need desks. It licensed an index. Once licensed, the cost to add dollars was zero. Trillions flowed into passive investing. The flows were multiplicative. MSCI owns more than two hundred indices across global equity, fixed income, and alternatives.