Approximately two years ago, just before an Exchange conference kicked off, one of the largest asset managers entered into the ETF market. Morgan Stanley Investment Management (MSIM), home to some of the strongest asset management brands, launched their initial suite of ETFs in January 2023. Today, they have more than a dozen products, including two with more than $1 billion in assets.
Calvert Brought ESG Expertise to the ETF Market
Morgan Stanley’s first products were launched in early 2023 under the Calvert brand. Calvert remains a leader in the environmental, social and governance (ESG) investment space. The Calvert US Large Cap Core Responsible Index ETF (CVLC) manages approximately $450 million in assets. CVLC holds nearly 800 stocks and was recently overweighted to information technology and financials relative to its Russell 1000 benchmark. In contrast, the ETF was underweighted communications services and energy stocks.
The firm also offers the Calvert International Responsible Index ETF (CVIE) and the Calvert US Mid Cap Responsible Index ETF (CVMC)
Eaton Vance Brand Known for Active Bond Strategies
The two largest ETFs under the MSIM umbrella began trading in the first quarter of 2024. The Eaton Vance Floating Rate ETF (EVLN) and the Eaton Vance Total Return Bond ETF (EVTR) each manage $1.2 billion in assets. EVLN is an actively managed floating-rate bank loan ETF. EVLN recently sported a 7.5% yield by taking on credit risk. The largest industry exposure was to software.
Meanwhile, EVTR is more of your classic core bond strategy. The 5% yielding ETF is also actively managed. Holdings are a mix of investment-grade corporate bonds, mortgages and Treasury bonds. Under the Eaton Vance brand, MSIM also offers an active short-term bond ETF. The Eaton Vance Short Term Bond ETF (EVSD) was converted from a mutual fund in June 2024. The conversion was a strong sign to us of Morgan Stanley’s commitment to the ETF industry.
Leveraging Parametric’s Options Heritage
MSIM also offers options-based equity strategies to help advisors generate income and manage risk. The Parametric Equity Income ETF (PAPI) is one example focused on providing an income alternative. PAPI recently had a 6.6% distribution yield. Meanwhile, the Parametric HedgedEquity ETF (PHEQ) uses options more to protect the downside. Both strategies are also actively managed. A third Parametric ETF was added to the lineup in November 2024.
MSIM is set to enter its third year as an ETF provider. We are excited to see the firm continue to educate ETF-minded advisors and investors about their in-house active management expertise from other investment products. Morgan Stanley Investment Management had $1.6 trillion in assets under management or supervision as of September 2024.
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