Morgan Stanley Pathway Funds Set for ETF Conversion

(Conversion, trading dates are corrected in fourth paragraph.) The Morgan Stanley Pathway Large Cap Equity Fund has $2.6 billion in assets.

Morgan Stanley plans to convert two of its Pathway-branded equity funds into ETFs, according to an Aug. 20 Securities and Exchange Commission filing.

The $2.6 billion Morgan Stanley Pathway Large Cap Equity Fund and the $470 million Morgan Stanley Pathway Small-Mid Cap Equity Fund will be transformed into ETFs, the filing states.  

A Morgan Stanley spokesperson told etf.com that the conversion aims to benefit from the actively managed ETF structure within their wealth management model portfolios.

The conversions are expected to take place on Nov. 15, with the new ETFs set to begin trading on the New York Stock Exchange on Nov. 18, according to the filing.

Morgan Stanley cited several reasons for the conversion, including “a more attractive opportunity” for asset growth, additional trading flexibility, greater transparency and enhanced tax efficiency.

The new ETFs will retain the Pathway branding, the spokesperson confirmed. They will be named the Morgan Stanley Pathway Large Cap Equity ETF and the Morgan Stanley Pathway Small-Mid Cap Equity ETF.

Automatic Conversions to ETFs

Shareholders will not need to take any action, as their mutual fund shares will automatically convert to ETF shares with an equivalent total dollar value, the filing said.

The board of trustees unanimously approved the conversions.

The spokesperson noted that there will be no changes to the underlying sub-advisors or investment guidelines as part of the conversion.

Morgan Stanley currently offers 15 ETFs with total assets under management of $2.5 billion, etf.com data shows. Its largest ETF is the $843.7 million Eaton Vance Floating-Rate ETF (EVLN).

Currently, the company's suite of ETFs includes six Calvert strategies, seven under the Eaton Vance brand and two Parametric equity ETFs, according to etf.com data. The largest Calvert ETF is the $346.3 million Calvert US Large-Cap Core Responsible Index ETF (CVLC), while the largest Parametric offering is the $66 million Parametric Equity Premium Income ETF (PAPI).