Morgan Stanley Ramps Up ETF Push with 5 New Funds

Morgan Stanley Ramps Up ETF Push with 5 New Funds

One of the new actively managed funds is an options-writing ETF that undercuts JEPI in price.

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

Morgan Stanley Investment Management launched five new funds on Thursday under their Eaton Vance and Parametric brands, expanding the firm’s move into the exchange-traded-fund business. 

The three Eaton Vance ETFs invest in bonds, while the two Parametric funds write options on a stock portfolio to generate income or hedge downside loss. The three bond funds focus on municipal bonds, ultra-short-term bonds and high-yield bonds, respectively. All five of the new funds are actively managed

The new products are part of Morgan Stanley’s return to the ETF sector years after it helped create some of the first ones, but then exited the business until earlier this year. The previous launches, along with the firm’s filing for mutual fund conversions earlier this month, show Morgan Stanley is expanding across the ETF market. 

“We’re in the initial steps of building out a multi-brand, multi-asset-class platform,” Anthony Rochte, global head of ETFs at Morgan Stanley, said in an interview.  

Options Priced to Sell 

Both options-based ETFs have expense ratios of 0.29%, making them cheaper than many of the dominant players in the options ETF business.  

The income-focused Parametric Equity Premium Income ETF (PAPI) is six basis points cheaper than the dominant player in the options-ETF sector, the $30 billion JPMorgan Equity Premium Income ETF (JEPI). The Parametric Hedged Equity ETF (PHEQ) undercuts BlackRock’s options-hedging ETFs by more than 20 basis points.  

Regarding the bond funds, Rochte emphasized the experience and infrastructure the firm has in bond investing. He also said that many of the people involved in managing the Eaton Vance fixed-income ETFs are veterans of fixed-income management and have been involved in managing some of the firm’s oldest mutual funds, such as the Income Fund of Boston, which was started in 1972. 

Investors will likely see considerably more activity from Morgan Stanley in the ETF world. Lauren Bellmare, executive director of corporate communications, said in an interview that this won't be just a one-year project and that the company plans to expand globally. 

“This is not just going to be a few more [funds]," she said.

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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.