Industry Updates

Morgan Stanley eyes European ETF expansion – report

The group already runs five UCITS ETFs via its Fundlogic platform

Theo Andrew

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Morgan Stanley is looking to back up its long-awaited entry into the US ETF market by expanding its European-listed range of products.

The US asset management giant, which launched its first range of ETFs in the US earlier this month, said European expansion is on the radar but unlikely before 2024, according to the Financial Times.

The group is looking to create a global ETF platform across asset classes and jurisdictions, Anthony Rochte, global head of ETFs at Morgan Stanley Investment Management, told the FT in an interview.

Morgan Stanley has been on the precipice of entering the US ETF market ever since its inception, passing on several opportunities to dominate the ETF industry which now totals roughly $9.8trn.

It does already have some presence in the European ETF market via its alternatives and systematic investment solutions business Fundlogic. The platform currently offers five multi-factor ETFs in partnership with Scientific Beta.

However, the new six-strong range of ETFs – two of which are actively managed – was launched under the Calvert brand in the US, its ESG investment arm, and could make their way to Europe some point next year.

In 1996, the group developed the World Equity Benchmark Series ETFs in partnership with Barclays Global Investors (BGI). The group sold the business to BGI four years later which rebranded it to iShares.

BlackRock then bought iShares from BGI in 2009 and went on to establish the biggest ETF issuer in the world with more than $3trn assets under management globally.

In 1993, Morgan Stanley developed Optimised Portfolios As Listed Securities (OPALS), an ETF-like product listed on the Luxembourg exchange. The idea of converting them to ETFs never happened.

The firm came close again in 2009 after former Goldman Sachs and Morgan Stanley employees created Source, a London-based ETF firm, of which Morgan Stanley was a backer.

However, the business was then sold to Invesco in 2017.

Rochte told the FT the group believes it is “still early” in the active space, an area that has attracted new asset managers into the market in recent months.

Several new issuers have entered the European ETF market in recent months with active propositions including Investlinx, Fineco Asset Management and AXA Investment Managers.

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