Morgan Stanley launching its own ETF

“Anything they do in this space will be interesting and notable.”

Eric Balchunas

NEW YORK: Almost three decades after coining the term “exchange-traded fund (ETF),” Morgan Stanley is finally set to enter the US$6.9 trillion (RM30.8 trillion) ETF arena with its own products.

The James Gorman-led bank applied for four socially conscious funds tracking US and international equities, according to a filing with US regulators.

The filing lands months after Morgan Stanley revealed plans to create a dedicated ETF platform in an internal memo.

The planned launches from Morgan Stanley are the latest in a series of investment giants caving to the ETF industry, with the likes of Capital Group and Neuberger Berman Group LLC taking the plunge in recent months.

Given that the bank’s asset management arm oversees US$1.4 trillion (RM6.25 trillion), Morgan Stanley’s moves will make a particular splash, according to Bloomberg Intelligence (BI).

“There’s a new issuer every month, practically, but Morgan Stanley is a beast of a company,” said BI’S senior ETF analyst Eric Balchunas. “Anything they do in this space will be interesting and notable.”

The filings include plans for the Calvert International Responsible Index ETF, the Calvert US Large-cap Core Responsible Index ETF, the Calvert US Large-cap Diversity, Equity and Inclusion Index ETF and the Calvert US Mid-cap Core Responsible Index ETF.

Morgan Stanley acquired the Calvert label with the 2020 purchase of asset manager Eaton Vance Corp.

Tickers and fees for the funds were not yet listed. A Morgan Stanley spokesperson declined to comment on the filings, citing regulatory rules.

While the potential funds would be the first modern-day ETFS for Morgan Stanley, the firm has a long history with the industry.

The bank was home to some of the world’s first ETFS in the 1990s, and was where Bob Tull, then a vice-president at the bank, and a team of lawyers came up with the term “exchange-traded fund.”

The bank’s influence on the industry didn’t stop there. In 1996, Morgan Stanley was granted regulatory approval to launch 17 ETFS known as World Equity Benchmarks (WEBS), with Barclays Plc as the fund manager.

Barclays later bought WEBS and rebranded it as “ishares,” and sold it to Blackrock in 2009.