Morgan Stanley Seeks Approval to Offer First U.S.-Listed ETFs
This article first appeared on Bloomberg
Morgan Stanley (MS.N) has asked securities regulators for the right to launch its first U.S.-listed exchange-traded funds, marking the latest example of a massive Wall Street investment manager courting investors’ growing use of those funds.
The company’s asset management unit asked the U.S. Securities and Exchange Commission for permission to launch “passive” ETFs that would mimic market indexes as well as “actively managed” ETFs, which allow portfolio managers to pick a set of stocks and bonds they expect to beat the market.
The move comes as businesses like investment management and wealth that offer more stable forms of revenue are growing in importance to Morgan Stanley and other Wall Street banks amid regulatory pressure that have crimped growth in traditional profit areas like trading.
The Morgan Stanley request came in two applications filed late on Friday.
A spokeswoman for Morgan Stanley declined to comment further on the filings.
In October, Morgan Stanley named former capital markets executive Dan Simkowitz as head of the unit, which includes traditional asset management, alternative investments and the merchant bank. Investment management represents less than 10 percent of the firm’s overall revenue, and Morgan Stanley is actively seeking to grow this unit by introducing new products.
In the first quarter, revenue from traditional asset management fell 8 percent to $403 million from the year-ago period.
Morgan Stanley’s traditional asset-management business oversaw $371 billion as of March 31.
Firms from Goldman Sachs Group Inc (GS.N) to JPMorgan Chase & Co (JPM.N), Legg Mason Inc (LM.N) and Franklin Templeton Investments (BEN.N) have been launching new funds and buying ETF firms over the last several months. Their hope is to capture a slice of the ETF business, now responsible for $3 trillion globally.
Goldman last September launched its own first-ever U.S. ETF.
In the mid-1990s, Morgan Stanley backed some of the earliest ETFs through its indexing affiliate MSCI (MSCI.N), which is now an independent company. Those ETFs are now managed by BlackRock Inc (BLK.N).
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Goldman Sachs Asset Management’s fundamental equity business manages over $20bn in thematic equities.
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