MSCI to drop Strategy from global indexes, putting billions in passive inflows at risk

what happened

Index operator MSCI will remove Michael Saylor's Strategy and several other companies from its global benchmarks. The provider concluded that these firms look more like investment funds than operating businesses, according to Reuters.

MSCI had earlier proposed excluding companies whose digital asset holdings make up 50% or more of total assets. It then launched a wider review of what it calls non-operating companies, which it says have fund-like characteristics and are therefore excluded from its benchmarks.

In extended trading on Wednesday, Strategy's shares fell 0.8%. They have dropped roughly 20% so far this year, while bitcoin is down 15%.

why it matters

Passive funds that track MSCI indexes typically buy constituent stocks in proportion to their weights. Exclusion could pull those inflows away from the shares, which may weigh on the price. For the wider market, it also signals that firms holding large crypto assets on their balance sheets could lose access to index-linked demand.

market impact

Strategy shares: exclusion from MSCI indexes may curb passive inflows, pressuring the stock

• ▼Strategy shares pressure down — removal from MSCI global indexes could curb passive investment inflows

tags

instruments