Morgan Stanley Investment Management plans to launch an exchange-traded fund platform this year and has hired Anthony Rochte from Goldman Sachs and Allyson Wallace from BlackRock as part of the new initiative, according to an internal memo.
"A first-class ETF platform will further enable us to match our world class investment capabilities with the diverse set of investment vehicles our clients increasingly demand," Dan Simkowitz, head of investment management at Morgan Stanley and co-head of firm strategy and execution, said in the memo distributed this week to the investment management business.
Mr. Rochte will join as global head of ETFs and Ms. Wallace will join as global head of ETF capital markets for the platform, the memo said. The first ETF products are expected to be launched within a year.
Mr. Simkowitz said in the memo that a "multi-asset ETF platform that covers active and systematic strategies will also complement our leadership in separately managed accounts … the distinguished mutual fund history at MSIM and Eaton Vance and our private fund platform."
Morgan Stanley Investment Management, the asset management unit of Morgan Stanley, together with its investment advisory affiliates, had $1.6 trillion in assets under management or supervision as of Dec. 31.
In March 2021, Morgan Stanley completed the acquisition of Eaton Vance, including its affiliates Calvert Research and Management and Parametric Portfolio Associates.
"ETFs are the last box that Morgan Stanley has yet to stamp on the large-scale asset manager bingo card," said Ben Johnson, director of global exchange-traded fund research for Morningstar, in an email. "It already has a mutual fund franchise, has long offered separately managed accounts, and acquired direct indexing capabilities when it brought Eaton Vance/Parametric into the fold."
At Goldman Sachs, Mr. Rochte served as co-head of its Private Bank Select business, the memo said. Previously, he was responsible for building and leading Fidelity's ETF business as head of institutional investment and technology solutions, it said. Mr. Rochte will report to Anton Kuzmanov, a managing director and co-head of strategy for investment management, the memo said.
At BlackRock, Ms. Wallace most recently served as global head of fixed-income product architecture and platform for the iShares ETF business, the memo said. She will report to Mr. Rochte.
It will be interesting to see how Morgan Stanley Investment Management "picks its spots" as it builds out its ETF lineup, Mr. Johnson said.
"For example, I'm not sure if some of their stock pickers would be comfortable with the format — especially if capacity is a concern," he said.
Mutual fund managers have the option of closing their funds if capacity becomes a concern, Mr. Johnson said.
"It will also be interesting to see if they build out a suite of basic building blocks — cheap index ETFs that could cater to the firm's advice business," Mr. Johnson said. "This playbook has been very successfully executed by Schwab."
Whatever path the firm decides to take, the effort will be in good hands, Mr. Johnson said.
"Tony Rochte and Allyson Wallace bring a wealth of experience spanning ETF product development to capital markets — which are table stakes as Morgan Stanley antes up at the big ETF table," he said.
A BlackRock official confirmed that Ms. Wallace had left the firm but declined to comment further. Goldman Sachs declined to comment.
