While it has no immediate or direct implications for actively managed exchange-traded funds, Morgan Stanley’s $ 7 billion acquisition of mutual fund manager Eaton Vance underscores the fact that a management active is still desirable on several fronts.
Eaton Vance has some experience with actively managed exchange-traded funds, previously listing certain products under the NextShares label.
“Morgan Stanley (ticker: MS) expects to break even on an earnings per share basis immediately after the Eaton Vance (EV) deal closes in 2021, and expects the deal to be” marginally accretive “to earnings after savings of $ 150 million, or 4%, of the combined expenses of Morgan Stanley Investment Management and Eaton Vance,” reports Leslie Norton for Barron.
With new active product offerings that retain the marketability factor of ETFs, but without disclosing holdings to mutual funds, will these funds attract investor interest? More importantly, their capital?
A new generation of active ETFS
A new generation of active ETFs are built similar to flagship investment strategies that have served fund family clients well for decades, active ETFs use the same portfolio managers as their corresponding mutual funds and employ The company’s long-standing strategic investment approach characterized by research, risk awareness and independent decision-making. This could be an area of growth where Morgan Stanley can capitalize on the purchase of Eaton Vance.
“Morgan Stanley was drawn to Eaton Vance’s strong relationships with wealth managers; its rapidly growing Parametric operation, which provides customization solutions for portfolios, indices and separately managed accounts; its Calvert sustainable investment operation; and other high performing investment management operations ”, according to that of Barron.
There are other advantages to the deal for the buyer.
“Morgan Stanley will be able to distribute Eaton Vance products through its wealth management, institutional and international platforms. After closing the deal, the bank said it will have the largest wealth management and investment platform in the world, with $ 26 billion in pro forma annual net income, ”the statement said. . Barron.
To learn more about active strategies, visit our Active ETFs channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon and may not come to fruition. The information on this site should not be used or interpreted as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.