Morgan Stanley is dipping a toe again into the $6.3 trillion exchange-traded fund trade.
The Innovator Fairness Managed Flooring ETF (ticker SFLR), which begins buying and selling Wednesday, is sub-advised by systematic asset supervisor Parametric Portfolio Associates, which was acquired by Morgan Stanley in March 2021 when the James Gorman-led financial institution bought Eaton Vance Corp.
The brand new fund represents the financial institution’s ETF administration comeback. It offers Morgan Stanley oblique publicity to the ETF trade as Wall Road waits for the financial institution’s personal funds to launch. Whereas Morgan Stanley was residence to among the world’s first ETFs within the Nineteen Nineties and helped spawn the dominant “iShares” enterprise that’s now owned by BlackRock Inc., the agency doesn’t at present oversee any of its personal funds.
SFLR will maintain primarily S&P 500 shares with a combination of an choices overlay, by which the ETF will buy a laddered collection of one-year, out-of-the-money put contracts paired with a short-term call-selling technique — a staple method of Parametric. It’s designed to restrict SFLR’s most losses to roughly 10% over a 12-month interval, in line with a press launch. The fund carries an expense ratio of 89 foundation factors.
“We consider that managing threat can elevate buyers’ anticipated outcomes over the long run,” Parametric Chief Funding Officer Thomas Lee mentioned within the launch.
Not like Innovator’s so-called Buffer funds which have propelled the funding advisor’s property beneath administration to greater than $10 billion, SFLR gained’t have a ceiling on upside beneficial properties, in line with the discharge. Additionally, the brand new ETF’s fairness holdings pays out dividends, not like the Buffer funds, which maintain virtually solely choices.