Morgan Stanley Investment Management Wednesday announced the launch of its exchange-traded fund platform with the listing of six Calvert ETFs, a much-anticipated move that comes nearly 30 years after Morgan Stanley helped pioneer the ETF space.
Launched on the NYSE Arca exchange were four index ETFs and two actively managed ETFs. Morgan Stanley, MSIM's parent company, acquired Calvert Research and Management as part of its 2021 Eaton Vance acquisition.
Each of the ETFs has an environmental, social and governance focus, according to a Morgan Stanley news release.
"This launch is the first step in MSIM's development of a robust ETF platform that supports products across our businesses, asset classes, jurisdictions, and brands," said Dan Simkowitz, head of Morgan Stanley Investment Management, in the news release.
The ETFs debuted almost a year after news broke regarding an internal announcement made by Mr. Simkowitz unveiling plans to launch an ETF platform as well the hiring of Anthony Rochte from Goldman Sachs and Allyson Wallace from BlackRock.
Mr. Rochte was named global head of ETFs at MSIM, while Ms. Wallace was named global head of ETF capital markets. Both are managing directors, a Morgan Stanley spokeswoman confirmed.
The four index funds are the Calvert International Responsible Index ETF; the Calvert U.S. Large-Cap Core Responsible Index ETF; the Calvert U.S. Large-Cap Diversity, Equity and Inclusion Index ETF; and the Calvert U.S. Mid-Cap Core Responsible Index ETF.
Expense ratios on those funds range from 0.14% for the Calvert U.S. Large-Cap Diversity, Equity and Inclusion Index ETF to 0.18% for the Calvert International Responsible Index ETF, according to Calvert's website.
The Calvert U.S. Select Equity ETF, one of the two actively managed funds, has a 0.29% expense ratio. The Calvert Ultra-Short Investment Grade ETF, the other actively managed fund, has a 0.24% expense ratio.
In a Jan. 4 blog post, Nate Geraci, president of The ETF Store, an investment advisory firm specializing in ETFs, and host of the weekly podcast "ETF Prime," predicted that Morgan Stanley will be the ETF issuer of the year in 2023.
"ETF nerds know that Morgan was actually a pioneer in international ETFs via their World Equity Benchmark Series (WEBS) ETFs, which launched in 1996 with Barclays as subadvisor," Mr. Geraci said in his post, adding that Morgan Stanley later sold the WEBS to Barclays. They were subsequently rebranded as iShares and sold in 2009 to BlackRock, the blog post said.
"The rest, as they say, is history…," Mr. Geraci's post said.
Despite his "overall bearishness" regarding ESG ETFs, Mr. Geraci said in the post that Morgan Stanley has something that most new ETF issuers don't have – distribution.
"Distribution is king," Mr. Geraci said, adding that Morgan Stanley's lateness to the ETF party doesn't matter. "Plus, I fully expect Morgan to branch out from ESG ETF offerings."
MSIM, together with its investment advisory affiliates, had about $1.3 trillion in assets under management or supervision as of Dec. 31, 2022.
