MFS, Inventor of the Mutual Fund, Joins ETF Bandwagon

MFS, Inventor of the Mutual Fund, Joins ETF Bandwagon

The firm is planning to introduce an exchange-traded fund by late 2024 or early 2025.

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Reviewed by: etf.com Staff
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Edited by: Mark Nacinovich

MFS Investment Management, a Boston-based firm that invented the mutual fund in 1924, plans to launch its first exchange-traded funds by as early as next year as ETFs gain assets and traditional mutual funds lose them. 

Despite being a trendsetter for mutual funds, MFS has dragged its feet in adopting ETFs. According to Morningstar Direct, it is the largest U.S. fund company by assets under management that doesn’t offer ETFs. The firm has $300 billion in assets under management.  

Dan Flaherty, assistant vice president of media relations for the Americas at MFS, cited “long-term client demand” for active ETFs as a reason that MFS is getting into the ETF business. In the first half of 2023, investors pulled $178 billion out of mutual funds excluding money-market funds and poured over $200 billion into ETFs, according to Cerulli Associates. 

MFS’ ETF business will be integrated into its other investment businesses, according to Flaherty, who also said that mutual funds will remain a “key focus.” 

“Our intention is to offer our key proven investment capabilities within an ETF structure,” Flaherty wrote in an email. 

MFS is recruiting for three ETF-related positions, including head of capital markets, product specialist and legal counsel.  

The new staff will help MFS wade into the field of active ETFs, a category that has received significant flows this year and has had a record number of launches.

Flaherty said MFS will introduce the ETFs by the second half of 2024 or the first half of 2025. 

MFS’ Mutual Fund History 

MFS created the first mutual fund, the Massachusetts Investors Trust, almost a century ago. The trust was the first open-end fund, Flaherty said. That means that it allowed the redemption and creation of new shares, as opposed to closed-end funds, which have a fixed share count. 

According to Time Magazine, the fund’s bylaws were so similar to the Investment Company Act of 1940 that MFS had to change only a few commas. That regulation established the rules for mutual funds as they exist today, 

Contact Gabe Alpert at [email protected]. 

Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting and analysis to Barron’s Magazine, Investopedia and other publications.