MSCI and UBS have formed a partnership that ties index design to alternative assets, a move that arrives just days after BlackRock advanced its own benchmarking tools. The pairing links MSCI’s index know-how with UBS’s alternatives book, signaling a push to set clearer standards for a part of the market that has long lacked them.
The agreement centers on how investors measure and allocate to assets such as private equity, private credit, infrastructure, and hedge funds. It comes as wealth and institutional clients press for better ways to track performance and manage risk in holdings that do not trade daily.
The tie-up, arriving days after BlackRock’s own push to introduce new benchmarking tools, pairs MSCI’s index expertise with UBS’s alternatives book.
Why Benchmarking Alternatives Matters
Alternative investments have grown quickly over the past decade. Industry estimates put global alternative assets under management in the tens of trillions of dollars, with private markets drawing fresh capital even through bouts of market stress.
Yet measuring these investments remains hard. Prices update infrequently. Returns are smoothed. Strategies differ widely. Without clear benchmarks, clients and boards struggle to judge performance, fees, and risk. That gap has opened the door for index providers and asset managers to craft new tools.
MSCI has built a franchise on equity and factor indexes used by trillions in assets. UBS runs a large wealth business and manages pools in private markets and hedge funds. The combination suggests new index families or reference portfolios designed for use in mandates, model portfolios, or reporting.
Competitive Pressure After BlackRock’s Move
BlackRock’s recent push on benchmarking tools highlights a race among global players to define how alternatives are measured. Clearer yardsticks can shape asset flows, product design, and even compensation structures tied to performance.
For clients, more comparable reporting may help with due diligence and portfolio construction. For providers, it can open related services, such as risk analytics, index-linked products, and data subscriptions. This context frames the MSCI-UBS tie-up as part of a wider contest for standards.
What Investors Could Gain
Better benchmarks can affect key decisions across portfolios. They can help investors judge whether returns justify illiquidity and higher fees. They can also aid rebalancing and stress testing.
- Improved transparency on returns and drawdowns across private and hedge strategies.
- Clearer comparisons across managers and vintages, which may inform fee negotiations.
- Potential for index-linked solutions that bring alternative exposures into model portfolios.
Still, trade-offs remain. Any index design will face questions on data quality, survivorship bias, and valuation timing. Hedge fund indexes can skew toward larger managers. Private market series may lag reality during fast-moving cycles. Users will need to examine methodology closely.
Methodology Will Be the Test
The value of any alternative benchmark depends on what it measures and how. Key design choices include data sources, weighting, treatment of fund closures, and the handling of stale prices. MSCI’s experience with factor and ESG methodologies may help, while UBS’s alternatives book offers real-world inputs on strategy mixes and liquidity needs.
Independent oversight and disclosure can build trust. Clear documentation on rebalancing rules, pricing lags, and dispersion across managers will matter. So will periodic audits or third-party reviews.
Implications for the Industry
If widely adopted, new benchmarks could shape product menus at banks, asset managers, and advisors. They may encourage standardized reporting across private funds and spur index-linked vehicles designed for wealth channels.
They could also influence fundraising. Strategies that score well against transparent measures may draw assets, while others face tougher comparisons. Over time, that can shift fee models, hurdle rates, and liquidity terms.
The partnership between MSCI and UBS lands at a time when clients want clearer measures for private and hedge exposures, and competitors are moving to meet that demand. The next phase will hinge on methodology, transparency, and user adoption. Investors should watch for how the partners define data inputs, handle valuation lags, and publish performance dispersion. Those details will decide whether the new tools become reference points or just another set of numbers.