Exchange-Traded Managed Funds Prepare To Challenge High Fee Mutual Funds

Exchange-traded managed funds (ETMFs) have the potential to dislocate higher fee actively managed mutual funds and put traditional asset managers in a dilemma, says a new report from Morgan Stanley.

Several weeks ago, Eaton Vance Corp (NYSE:EV), a well known alternative asset product distributor, was granted exemptive relief to offer ETMFs, a move being closely watched in the asset management industry. The Morgan Stanley report, written by Thomas Whitehead, Betsy Gaseck and Elizabeth Elliott, said that while it may take time for the ETMF product to gain acceptance, ultimately “ETFs have gained a meaningful ally and will benefit as the low-cost market solution.”

Exchange Traded Funds were originally...