Morgan Stanley's Parametric Portfolio Associates is subadvising an exchange-traded fund that launched Wednesday, news that comes ahead of Morgan Stanley's much-anticipated launch of its own ETFs.
Parametric, which Morgan Stanley acquired as part of its 2021 acquisition of Eaton Vance Corp., is the subadviser on the Innovator Equity Managed Floor ETF, launched by Innovator Capital Management.
"We're very excited to be working with Parametric to list the Innovator Equity Managed Floor ETF, a core portfolio product that we've been brainstorming for some time," Bruce Bond, Innovator Capital Management's co-founder and CEO, said in a news release.
The new fund is "constructed with stocks and an intelligent options overlay to help investors limit equity market drawdowns while gaining exposure to equities' dividend income streams as well as their upside potential during strong positive market environments," Mr. Bond said in the release.
Plans by Morgan Stanley Investment Management, the asset management unit of Morgan Stanley, to launch an ETF platform of its own were unveiled in an internal memo earlier this year.
"Morgan Stanley, which has missed out on the first nearly 30 years of ETF asset growth, is beginning to leverage its expertise to develop a presence," Todd Rosenbluth, head of research at VettaFi LLC, a data and analytics provider, said in an email Thursday. "In addition to the partnership Innovator has with Parametric, the firm plans on soon launching its first set of ETFs through the well-established ESG capabilities of Calvert."
However, significant potential for growth still exists within the ETF market, "and deep-pocketed, well diversified firms can make inroads," Mr. Rosenbluth said.
In August, MSIM filed to offer its first ETFs — four index ETFs with an environmental, social and governance focus. Those funds are the Calvert International Responsible Index ETF, Calvert U.S. Large-Cap Core Responsible Index ETF, Calvert U.S. Large-Cap Diversity, Equity and Inclusion Index ETF and the Calvert U.S. Mid-Cap Core Responsible Index ETF.
As with Parametric, Calvert Research and Management is an MSIM subsidiary acquired as part of the Eaton Vance acquisition. A Morgan Stanley spokeswoman on Thursday declined to comment regarding the four ETFs or any plans for additional ETF filings.
While the four new funds will mark Morgan Stanley's first ETFs, it has links dating back to some of the first ETFs. Twenty-six years ago, it was instrumental in the launch of the World Equity Benchmark Series, country index funds managed by Barclays Global Investors. The funds, which eventually became part of the iShares franchise of ETFs, were based on equity indexes developed by MSCI.
Parametric managed more than $366 billion as of Sept. 30. As of Monday, Innovator Capital Management had assets under management totaling about $10 billion, an Innovator spokesman said.
