MSCI Barra: Index Transition Costs Not Unreasonable

Critics and competitors are claiming that the index changes—designed to improve MSCI's coverage of emerging market small-cap stocks—will force buy-side firms that follow the indexes to make major changes to their portfolios.

A recent research report from HSBC's equity quantitative research team subtitled "Time to reset benchmarks?" warned that the changes to MSCI's indexes "are likely to result in significant turnover and … considerable cost to passive portfolio managers."

While the HSBC team