Core Insights - The chairman and CEO of Neuberger Berman, George H. Walker, emphasizes the firm's ongoing high allocation to China, indicating that significant foreign investment in China will take time to materialize [1][9] - Walker notes the importance of diversification and maintaining investments in a complex macroeconomic environment, suggesting that global economic growth may be below expectations [1][11] Company Overview - Neuberger Berman, founded in 1939, manages assets totaling $558 billion, approximately 3.97 trillion RMB, and operates in 26 countries and 39 cities [2] - The firm has a strong presence in both public and private markets, with $358 billion in public market assets and $150 billion in private market assets as of the end of 2024 [2] Investment Strategy - Walker highlights the growing trend of active management firms entering the ETF space, with Neuberger Berman's active ETF business growing to approximately $2.5 billion [5] - The firm focuses on providing unique value in areas where it can compete effectively, particularly in active ETFs, which are expected to grow significantly [4][6] Market Trends - The demand for transparency and tax efficiency is driving the growth of active ETFs, with U.S. investors increasingly favoring these products over traditional mutual funds [5][6] - Active ETFs are currently experiencing growth rates that exceed those of passive ETFs, indicating their potential in the market [6] Risk Management - Walker stresses the importance of proactive decision-making to navigate potential crises, drawing from experiences during the 2008 financial crisis [3] - The firm aims to align its compensation structure with client interests, ensuring that deferred compensation is tied to client performance rather than company stock prices [7] Global Perspective - Neuberger Berman has maintained an overweight position in Chinese assets, reflecting a positive outlook despite the need for time before significant foreign investment increases [9] - The firm acknowledges the challenges posed by high valuations in U.S. tech stocks, suggesting that the focus should be on investment strategies rather than outright investment decisions [10]

Core Viewpoint - The chairman and CEO of Neuberger Berman, George H. Walker, emphasizes the firm's ongoing high allocation to China, suggesting that significant increases in foreign investment in China will take time [2][16]. Group 1: Company Overview - Neuberger Berman, founded in 1939, manages assets totaling $558 billion, approximately 3.97 trillion RMB, and operates in 26 countries and 39 cities [3]. - The firm has a strong presence in both public and private markets, with $358 billion in public market assets and $150 billion in private market assets as of the end of 2024 [3]. - Neuberger Berman leads in the Qualified Domestic Limited Partner (QDLP) business in mainland China [3]. Group 2: Investment Strategy and Market Outlook - Walker believes that the global economic growth may fall below expectations, and investors should focus on maintaining diversified portfolios [2]. - The rise of global ETFs is noted, with active management firms increasingly entering this space, which is expected to continue [8]. - The firm has seen its active ETF business grow from a small base to approximately $2.5 billion, driven by new client inflows [9]. Group 3: Active vs. Passive Management - Active ETFs are experiencing growth at a rate that surpasses passive ETFs, indicating significant potential for active management products [11]. - The firm acknowledges that while the popularity of passive investment may increase if the market remains concentrated in a few stocks, active management will thrive in a diversified market [11]. Group 4: Client Concerns and Risk Management - Chinese clients are particularly focused on risk control capabilities and the volatility of their portfolios [15]. - Walker highlights the importance of maintaining discipline in investment strategies, especially during market downturns, to avoid the pitfalls of market timing [19].

Financial Data and Key Metrics Changes - MSCI reported organic revenue growth of 9%, adjusted EBITDA growth of 10%, and adjusted earnings per share growth of over 15% in Q3 2025 [6] - The company repurchased $1.25 billion worth of shares in Q3, bringing year-to-date repurchases to over $1.5 billion, with an additional $3 billion authorized for future repurchases [6] Business Line Data and Key Metrics Changes - The Index franchise achieved recurrent net new subscription sales growth of 27%, with 43% growth in the Americas [7] - Total AUM in investment products linked to MSCI indices reached $6.4 trillion, including $2.2 trillion in ETFs and $4.2 trillion in non-ETFs [7] - Analytics saw recurrent net new sales growth of 16%, driven by strong adoption of risk tools and equity models by hedge funds [8] - Subscription run rate growth was 9% for asset owners, 11% for wealth managers, and 9% for banks and broker dealers [10][12][14] Market Data and Key Metrics Changes - MSCI's ETF run rate hit a record high of nearly $800 million, driven by record AUM levels in both ETF and non-ETF products linked to MSCI indices [6][7] - Equity ETFs linked to MSCI indexes captured $46 billion of inflows during Q3 [17] Company Strategy and Development Direction - MSCI is focusing on expanding its presence in newer client segments while deepening penetration in established segments [9] - The company is leveraging AI to enhance existing products and develop new capabilities, aiming to unlock significant value for clients and shareholders [9][41] - MSCI is committed to becoming a leading provider of transparency tools in the private credit space, with a focus on innovation and product development [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term opportunities and growth potential from recent innovations and investments [16] - The company is optimistic about the recovery of the active asset management industry and aims to help clients develop new products [31][60] - Management acknowledged challenges in the sustainability and climate segment but emphasized ongoing efforts to monetize climate-related indices [53][55] Other Important Information - MSCI launched a Private Credit Factor Model and a new global taxonomy for private assets, enhancing transparency and standardization in private markets [8][9] - The retention rate for sustainability and climate solutions was nearly 94%, reflecting the essential nature of MSCI's tools [20] Q&A Session Summary Question: Strategy around private credit - Management is bullish on private credit, emphasizing the need for transparency tools and credit assessments to attract institutional capital [24][25][28] Question: New products and marketing efforts - The strategy includes helping the active asset management industry create new products, particularly in the active ETF space [31][60] Question: AI opportunities and cost savings - AI is expected to dramatically increase margins by enabling faster product development and reducing operational costs [63][64] Question: Pipeline and sales cycle for Q4 - The overall environment is stable, with a healthy product pipeline supporting strong client engagement [46][48] Question: Non-ETF and fixed income business performance - Non-ETF revenue growth can be affected by lumpiness, while fixed income AUM is around $90 billion, with ongoing focus on innovation [52][55] Question: Active ETFs economics and competitive advantages - Active ETFs are seen as a new revenue opportunity, with significant growth potential without cannibalizing existing business [58][60] Question: Competitive moat against new entrants - MSCI's proprietary data and trusted reputation create significant barriers to entry for potential competitors [72][75] Question: Performance of net new sales in EMEA - There was a decline in net new sales in EMEA, with ongoing product innovation aimed at addressing client needs [78]

Financial Data and Key Metrics Changes - MSCI reported organic revenue growth of 9%, adjusted EBITDA growth of 10%, and adjusted earnings per share growth of over 15% in Q3 2025 [4] - The company repurchased $1.25 billion worth of shares in Q3, bringing year-to-date repurchases to over $1.5 billion, with an additional $3 billion authorized for future buybacks [4] Business Line Data and Key Metrics Changes - The index franchise achieved recurrent net new subscription sales growth of 27%, with 43% growth in the Americas, and total AUM in investment products linked to MSCI indices reached $6.4 trillion [5] - Analytics delivered recurrent net new sales growth of 16%, driven by strong adoption of risk tools and equity models by multi-strategy hedge funds [6] - Subscription run rate growth for wealth managers was nearly 11%, while asset owners posted 9% growth, and banks and broker dealers achieved 9% growth [11][12][13] Market Data and Key Metrics Changes - Equity ETFs linked to MSCI indices captured $46 billion of inflows during Q3, with strong demand for MSCI Developed Markets ex U.S. and MSCI Emerging Markets Indexes [16] - The retention rate for sustainability and climate solutions was almost 94%, reflecting the essential nature of these tools [18] Company Strategy and Development Direction - MSCI is focusing on expanding its presence in private credit and enhancing its client segmentation strategy to deepen penetration in existing segments while targeting new client segments [9][10] - The company is leveraging AI to enhance product offerings and operational efficiency, with a goal to significantly increase the scale of datasets and improve margins [39][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term opportunities and the ability to drive growth from recent innovations and investments, particularly in private assets and wealth management [15][34] - The company noted a stable market environment with consistent dynamics, particularly in the Americas, and highlighted a healthy product pipeline supporting strong client engagement [45][46] Other Important Information - MSCI launched a private credit factor model and a new global taxonomy for private assets, aiming to provide consistent standards and improve transparency in private markets [7][8] - The company is seeing strong momentum in new product development, particularly in AI-driven solutions, which are expected to enhance revenue growth and operational efficiency [40][42] Q&A Session Summary Question: Strategy around private credit - Management is bullish on private credit, emphasizing the need for tools to demonstrate creditworthiness and market risk, and highlighted innovations in credit assessments and private credit indices [22][23][24][26] Question: New products and marketing efforts - The strategy includes helping the active asset management industry create new products, particularly in active ETFs, and expanding into new client segments [28][29][30][32][34] Question: AI opportunities and cost savings - AI is expected to dramatically increase margins by enabling faster product creation and reducing operational costs, with significant investments in AI projects [37][61] Question: Pipeline and sales cycle for Q4 - The overall environment is stable, with a healthy product pipeline and strong client engagement, particularly in index and analytics [44][45] Question: Non-ETF and fixed income business performance - Non-ETF revenue growth can be affected by lumpiness, while fixed income AUM is around $90 billion, with ongoing focus on driving adoption and innovation [49][51] Question: Active ETFs economics and competitive advantages - Active ETFs are seen as a growing category, providing new revenue opportunities without cannibalizing existing business [56][58] Question: Competitive moat against new entrants - MSCI's proprietary data, trusted models, and established client relationships create significant barriers to entry for potential competitors [70][74][76] Question: Performance in EMEA region - There has been sluggishness in EMEA, but product development efforts are global, and innovations are expected to drive growth in the region [78]