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MSCI Set to Buy Fabric, Expand Footprint in Wealth Management

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MSCI (MSCI - Free Report) is set to expand its footprint in the wealth management space, thanks to the recently announced acquisition of Fabric, which is expected to close in the first quarter of 2024.

Fabric offers a wealth technology platform that specializes in portfolio design, customization, and analytics for wealth managers and advisors. The platform is well-known for its rule-based portfolio construction tools and leverages the MSCI Multi-Asset Class Factor Model and MSCI Private Asset Model.

The MSCI-Fabric combination will help wealth managers and advisors to “consistently implement their investment guidance while meeting their client’s personal preferences and delivering customization at scale.”

The addition of Fabric’s rule-based portfolio construction tool will broaden MSCI’s market reach and expand the portfolio of solutions, which are expected to expand clientele including bothinstitutional and individual investors.

MSCI Inc Price and Consensus

 

MSCI Inc Price and Consensus

MSCI Inc price-consensus-chart | MSCI Inc Quote

MSCI Rides on Strong Portfolio

MSCI gains from strong demand for custom and factor index modules, a recurring revenue business model, and the growing adoption of its ESG and Climate solutions in the investment process.

Acquisitions have played a significant role in shaping the company’s growth trajectory. In October, MSCI completed the acquisition of Burgiss. The deal offered it comprehensive data and deep expertise in all private assets. MSCI now has the world's largest and highest-quality private asset class database, covering more than $60 trillion of assets.

Moreover, the deal expanded MSCI’s robust suite of multi-asset class technology solutions with the industry-leading Burgiss Caissa platform. MSCI expects Burgiss to generate slightly above $90 million in revenues for 2023, with revenues of $22-$24 million expected in the fourth quarter.

The acquisition of Trove Research strengthens MSCI’s data capabilities on the voluntary carbon market, which it believes will play a significant role in helping institutional investors and companies reduce climate risks.

MSCI served more than 6500 clients as of Sep 30 in more than 90 countries. It benefits from a recurring revenue model (roughly 97% of the total revenues) and strong operating efficiency. However, the challenging macroeconomic environment and rising geopolitical prospects do not bode well for MSCI’s near-term prospects.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold).

MSCI shares have gained 16.1% year to date, underperforming the Zacks Computer & Technology sector’s return of 49.8%.

Ceridian HCM , Dropbox (DBX - Free Report) and 8x8 (EGHT - Free Report) are some better-ranked stocks in the broader sector, each flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Year to date, shares of Ceridian HCM and Dropbox have gained 3.8% and 33.1%, respectively. 8x8 shares have declined 20.1% over the same timeframe.


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