Morgan Stanley returns to ETFs with six funds

Morgan Stanley Investment Management (MSIM) has unveiled a suite of ETFs, the firm’s first since the early ETF pioneer exited the industry more than two decades ago.

Listed on NYSE Arca, the suite consists of six ETFs including actively managed ultra-short bond and US large-cap equity funds, as well as a further four index-linked equity products offering exposure to different segments within US and global ex-US investment universes.

Each ETF carries the brand name of Calvert Research and Management, a Morgan Stanley subsidiary and socially responsible investment specialist who serves as sub-advisor to the funds.

Calvert applies its ‘Principles for Responsible Investment’ to each ETF to ensure that constituents selected for the funds are operating their business in a manner consistent with environmental, social, and governance (ESG) principles.

Dan Simkowitz, Head of Morgan Stanley Investment Management, commented: “The launch of MSIM’s ETF platform builds on our world-class investment capabilities with a diverse set of investment vehicles that aim to provide strategic value for our clients. This launch is the first step in our development of a robust ETF platform that supports products across our businesses, asset classes, jurisdictions, and brands.”

Anthony Rochte, Global Head of ETFs at Morgan Stanley Investment Management, added: “We are excited to introduce MSIM’s comprehensive investment capabilities in an ETF structure with this Calvert product suite. Investors require a range of different product structures within a portfolio to help meet their distinct investment objectives, and ETFs can provide specific advantages including tax efficiency, transparency, value, and trading flexibility. We look forward to continuing to strengthen our offering for clients with active and systematic strategies that build on MSIM’s global expertise.”

The ETFs

The actively managed Calvert Ultra-Short Investment Grade ETF (CVSB US) invests in US dollar-denominated, investment-grade, fixed income instruments including government and corporate bonds, as well as asset-backed and mortgage-backed securities. The fund targets a portfolio duration of one year or less. The ETF comes with an expense ratio of 0.24%.

The actively managed Calvert US Select Equity ETF (CVSE US) focuses on US large-cap equities of companies that Calvert believes are successfully addressing global environmental or societal challenges, or are leaders in managing financially material ESG risk factors. The fund comes with an expense ratio of 0.29%.

The Calvert US Large-Cap Core Responsible Index ETF (CVLC US) tracks the Calvert US Large-Cap Core Responsible Index which consists of roughly three-quarters of the 1,000 largest US-listed equities, selecting companies that perform the best according to Calvert’s ESG analysis. Constituents are initially weighted by float-adjusted market capitalization but may be adjusted to align the index’s sector allocation closer in line with the initial universe. The fund comes with an expense ratio of 0.15%.

The Calvert US-Mid Cap Core Responsible Index ETF (CVMC US) also comes with an expense ratio of 0.15%, while the Calvert International Responsible Index ETF (CVIE US) is priced at 0.18%. The funds are linked to the Calvert US-Mid Cap Core Responsible Index and Calvert International Core Responsible Index which utilize a similar approach as described above for the Calvert US Large-Cap Core Responsible Index but applied to initial universes of US mid-cap stocks and large-cap stocks from developed market countries excluding the US.

Finally, the Calvert US Large-Cap Diversity, Equity, and Inclusion Index ETF (CDEI US) tracks the Calvert US Large-Cap Diversity Research Index which consists of US large-cap companies that meet certain criteria relating to having a diverse workforce, an equal and inclusive work culture, or demonstrate significant improvement in diversity practices. The fund comes with an expense ratio of 0.14%.