The Central Nervous System
of Wall Street.

The Birth of an Industry Standard

In the mid-1970s, a Berkeley economics professor named Barr Rosenberg fundamentally changed how institutional investors think about risk. Rosenberg founded Barra Inc. in 1975, introducing the concept of multi-factor risk models that would become the industry standard for portfolio risk management.

His core insight was that stocks with similar fundamental characteristics tend to move together, and these common movements can be systematically measured and predicted. While it might sound simplistic, following the chain of logic to its mathematical conclusion transforms it into a fabulously useful tool for understanding risk and performance.

The company’s first model, the USE1 (US Equity Model 1), launched in 1975, followed by USE2 in 1985 and USE3 in 1997. These models gained traction through the 1980s and early 1990s, initially among quantitative institutional investors. By the late 1990s, as hedge funds exploded into a trillion-dollar industry, Barra models became essential infrastructure.

Today, MSCI’s Barra models are accessed by over 1,200 financial institutions worldwide. The models have evolved from an academic curiosity to table stakes for any serious institutional investor. They are the daily machinery that governs capital allocation at the highest levels of finance.