So, those are basically the broad areas that we are focusing on, on the product side. And of course, all of that has a huge corollary of the areas that we are expanding into the client side beyond active managers. As it was said before, you will hear quite often the balance sheet of bank, the hedge funds, the corporates, the asset owners, and so on and so forth. So, that is an area – those are on the client side, we see enormous growth opportunities in the non-asset management segment. So, that’s a little bit of an overview.
Operator: Your next question comes from the line of Scott Wurtzel with Wolfe Research.
Scott Wurtzel: Hi. Good morning and thanks for taking my question here. I just wanted to touch on the basis point fees within the Index segment and kind of seeing that steadily decline over the last few quarters. Are there any mix dynamics there we should be aware of as it relates to the current market environment? And how should we be thinking about that basis point fee going forward? Thanks.
Andy Wiechmann: Sure. Yes. So we did see a modest decline in the basis points from the prior quarter from 2.50 basis points down to 2.48 basis points. That was driven almost entirely by mix shift. Most of that resulted from a lower contribution of higher fee international products and a higher contribution to AUM from lower fee products with U.S. exposure. I would say there is nothing new to call out here. There can be some dynamics with AUM levels. And you saw this when AUM levels dropped, there was more stability in the fees. So, there are some fee arrangements we have where the fees do step up at lower AUM levels and vice versa, they step down at higher AUM levels. And so that can be one small factor to point out, but I would say nothing out of the ordinary or nothing new relative to what we have seen in the past.
We do expect over time fees to gradually come down, driven by mix shift although we expect the growth in assets and the tremendous opportunity we have across so many different frontiers to more than offset that decline, which is what we have seen and as you can tell by the healthy overall ETF revenue contribution, but also the overall ABF revenue growth. And so I would highlight that within non-ETF passive, the fee dynamics have been much more stable there. And that’s going back to the question about custom indexes in the non-ETF passive category. That is an area where we see tremendous engagement and growth around areas like custom indexes and many times, those can be higher fee type mandates that we see.
Operator: Your next question comes from the line of Craig Huber with Huber Research Partners.
Craig Huber: Thank you. Can you touch on AI and the benefits that you can see going forward here to benefit your products over time, you could potentially sell at a significantly higher price point? What excites you on that front? And also touch on, if you would, the cost-cutting opportunity going forward on that front? Thank you.
Baer Pettit: Sure. I will make a few observations on that. So, I will start with the first point, which is about efficiencies. So, I think we prefer to see it as efficiencies rather than cost-cutting per se because a lot of our goal is to try to get things done faster and to reinvest a lot of that in these growth opportunities that we are talking about. But we are very focused on that aspect of things across a variety of projects that we have going on. So, in turn, we are also working to apply AI in a variety of product areas. We have some – actually, a launch coming up during the course of this quarter on analytic insights where we, in essence, take an enormous amount of complex data for clients, which they normally would have to parse through in rather in efficient ways and bring the direct insights using AI.
So, I think that will just be the beginning of that. We have to really be focused on thinking about this in a competitive environment. And so as we go forward, I think the real benefit of AI for us is that we are a very data-rich environment. And our clients are always trying to get greater insights out of all of those capabilities that we deliver to them. And so in terms of new product development, that’s where we will definitely be keeping you have more news during the rest of this year as we bring out, as I said, both in this quarter and quarters ahead, capabilities about bringing our clients greater insight and faster and differentiated calculations using AI.
Operator: Your next question comes from the line of Faiza Alwy with Deutsche Bank.
Faiza Alwy: Yes. Hi. Good morning. Thank you. I wanted to touch on capital allocation, just given what the stock has been doing over the last year and more recently, I am curious if your views on capital allocation have evolved and how you would prioritize share buybacks versus potential M&A opportunities and other things? Thank you.
Andy Wiechmann: Sure. Yes. So, I would say, generally, our approach to capital allocation has not changed. So, we pay a steady dividend that grows with EPS of the company. And then we look to generate value with excess capital and cash beyond that. And so we are continually looking for opportunities to do that. While we do monitor the market for potentially strategic attractive MP&A, sometimes the best opportunity for us for creating value is investing in MSCI, so buying our stock back. And so we are long-term believers in the company and the future value. And so our approach to share repurchases has not changed, and we will look to use available cash when we see attractive opportunities in the stock.
Operator: Your next question comes from the line of Russell Quelch with Redburn Atlantic. Russell, I think you are on mute. Your next question comes from the line of Greg Simpson with BNP Paribas.
Greg Simpson: Hi there. I just wanted to check in on private markets. Can you talk about the run rate growth of Burgiss. And if you think the 20% top line growth you talked about for 2024 and beyond still looks on track, or are there any challenges in the sales environment within private markets? Thank you.
Andy Wiechmann: Sure. Yes. So, as Baer alluded to, we saw a 17% run rate growth in private capital solutions. I would say generally, our integration is largely on track from both a go-to-market and a technology and data infrastructure standpoint. We have seen encouraging signs in the areas where we think we can add value. So, we have seen outsized growth in EMEA and getting good traction in Asia. So, areas where I think MSCI can help on the go-to-market. I would say more generally, we continue to be optimistic about the long-term opportunity across private capital solutions and continue to see big long-term opportunities there.
Operator: That concludes our Q&A session. I will now turn the conference back over to Henry Fernandez, Chairman and CEO of MSCI.
Henry Fernandez: Thank you for joining us today and for those very insightful questions that you asked. As we have said in the past, our operating structure at MSCI is to continue to be a long-term compounder of our earnings and our share price and our revenues and all of that. And there is absolutely no change in our objectives to achieve that. Despite the operating environment challenges that we have had in the last few quarters, we remain conscious in this secular tailwinds and opportunities that we see ahead and that will continue to power our business. The elevated cancels we experienced in the first quarter were as a result of a concentration of client events that we do not expect to continue at these levels in quarters to come.
And as we have said, our level of engagement with clients is on parallel [ph], is at a record high, the level of things that they want us to do, solutions that they want us to come up with is totally unparalleled, and it is increasing pretty much every day, every week, every quarter. And therefore, we are very committed in helping them achieve those objectives, whether it’s capitalizing on opportunities or dealing with problems in their portfolios. Therefore, our all-weather franchise is pretty resilient, and it supports the business through good times and bad times. And we would like to thank you again for joining us this morning, and we look forward to speaking with you in the next few days and weeks.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
