Industry Updates

Morgan Stanley closes US equity factor ETF

USEF had less than $1m AUM

Theo Andrew

Locked shutters closed business

Morgan Stanley is set to close its US equity factor ETF with less than $1m assets under management (AUM) seven years after it launched.

In a shareholder notice, the group said the MS Scientific Beta US Equity Factors UCITS ETF (USEF) will stop trading on 17 November with $590,000 AUM.

It comes after the MS Scientific Beta Global Equity Factors UCITS ETF (GEF) was also delisted in August 2021.

The shareholder note said: “As a shareholder in the fund, we are writing to inform you that the directors have resolved to terminate the fund, with effect from 2022.

“This decision has been taken because the fund’s value is below the minimum level detailed in the prospectus, namely $50m.”

USEF, which launched in 2015, was listed on the London Stock Exchange and tracks the Scientific Beta United States Multi Beta Multi-Strategy Equal-Weight index.

It has a total expense ratio (TER) of 0.40%.

The index synthetically replicates US equities incorporating four factors including size, momentum, value and low volatility, which are then equally weighted across five weighting schemes.

The ETF has returned -22.2% so far this year versus -22.9% for the S&P 500.

Morgan Stanley currently has five multi-factor ETFs remaining, available via its platform Fundlogic, the largest of which is the SciBeta HFE US Equity 6F EW UCITS ETF (USHF) with $224m AUM.

It is the second US equity factor ETF to announce its closure this week, after JP Morgan Asset Management shut the JP Morgan ETFs US Equity Multi-Factor UCITS ETF (JPUS).

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