Morgan Stanley Investment Management is poised to launch its first suite of ETFs in Europe.
Ally Wallace, Managing Director and Global Head of ETFs for Morgan Stanley Investment Management explains that the firm’s ETF platform has been live for three and a half years and accrued USD16.5 billion in 22 products.
“We mostly focus on active ETFs,” Wallace says. “In the US the ETF business is an overlay across all of our investment capabilities with a focus on the different brands under our umbrella. We have fundamental active branded from the Eaton Vance perspective, Parametric which offers more systematic customisation and an ability to scale and Calvert, which is one of the longest standing of the sustainable brands in the US with 40 plus years in the sector.”
In addition, the firm has a passive cryptocurrency suite. While in the US the different brands function separately under the USD7.5 trillion Morgan Stanley Wealth brand, in Europe, the new products will be Morgan Stanley brands.
Morgan Stanley filed a registration statement detailing plans to introduce four ETFs to the European marketplace earlier this year.
The launch in Europe is expected in the Autumn, depending on regulatory approvals. “We wanted to ensure that we had the US business on a good path from a scale perspective and we wanted to extend from the investment capabilities we had there,” Wallace says.
“We also have strong investment capability here so it’s a natural extension of the business and its growth.”
According to the registration statement, the four new ETFs will focus on energy, multi-polar world, examining how the world is becoming more globalised, AI and top picks from the investment team.
“We are very excited,” Wallace says. “Our target audience is our existing clients drawn from the institutional, private bank and intermediary community but we are also targeting the broader neobroker community.”
The savings plan route into ETFs is huge in the US, Wallace says. “What is interesting to see here is where the neobroker is on the trajectory in Europe. From Germany to Sweden it can look very different so understanding regional idiosyncratic ways that they are coming to market is the challenge.”
Wallace has also been interested in how different the US and Europe are, with a reverse in Europe where the ETF business has been more institutional and it’s now more about democratising investment. “It’s like a muscle you have had to develop,” Wallace says.
“We are focused on a lot of that play-out in the US, but coming to Europe has been very much about not replicating what already exists but bringing new concepts and investment capabilities to the market. We do have a breadth of abilities under us. We can toggle the outcome based on what our clients desire to suit the markets here as we can customise to any market – so we are researching the sweet spot from the client’s perspective.
“Being from the traditional sales structure, one thing we recognised when we decided to launch here was that this is a growing audience which is looking at innovation in a different way and driving a lot of the growth. Conversations have been positive. The funds they use now are of course passive but long term they are looking at the more active option.”
