MSCI is considering excluding companies from its indexes if digital assets make up more than half of their balance sheet.
70%+ ($3.7B) of MSCI's assets are classified as “intangible” (goodwill and other intangible assets).
Ironic that the “intangible” digital assets being targeted are exponentially more liquid, observable, and tradeable than “goodwill and other intangible assets.”
REITs hold real estate.
Timber companies hold timber.
Gold miners hold gold.
Oil and gas companies hold oil and gas.
No one calls them “funds.”
They are widely accepted as operating companies.
Yet 54% of MSCI Inc.’s balance sheet assets are goodwill.
By that logic, should MSCI be considered a goodwill “fund”?
Do you hear how absurd that sounds?
1. High asset concentration does not make a company a fund.
Many operating companies are naturally asset-concentrated by design. REITs hold real estate. Timber firms hold timber. Oil and gas companies hold hydrocarbons. Gold miners hold gold. None of these are treated as investment funds or excluded from major equity indices simply because of balance sheet composition.
2. A fixed percentage threshold is arbitrary and unworkable.
Using a 50% asset test tied to volatile assets creates instability. Asset values fluctuate, accounting treatments differ, and companies could move in and out of index eligibility without any change in their underlying business operations. That distorts index construction and undermines consistency.
3. This approach injects subjective policy judgments into index construction.
Index providers are meant to reflect market reality neutrally, not decide which assets are acceptable to hold. Singling out Bitcoin while ignoring identical balance-sheet logic applied elsewhere breaks long-standing indexing principles and erodes confidence in benchmark neutrality.
$MSTR is not a fund.
It is an operating company.
And balance sheet composition alone does not change that.
