Morgan Stanley to Introduce ETF Share Class Inspired by Vanguard’s Approach to its Established Mutual Fund Range

Crypto News– The recent approval of multiple spot Bitcoin exchange-traded funds (ETFs) in the United States has triggered significant shifts in Wall Street’s landscape of fund managers. Over the past few weeks, there has been a notable surge in cash inflows, accompanied by a considerable outflow from mutual funds. Market data compiled by Bloomberg indicates that in 2023, mutual funds experienced an outflow of approximately $656 billion, while ETF fund managers recorded inflows totaling $578 billion.

Morgan Stanley to Introduce ETF Share Class Inspired by Vanguard’s Approach to its Established Mutual Fund Range

The potential for further disruption looms large if the United States Securities and Exchange Commission (SEC) greenlights Morgan Stanley’s (NYSE: MS) recent application to incorporate an ETF share class into its existing mutual funds, akin to the approach taken by The Vanguard Group Inc. based in Pennsylvania.

Ben Johnson, head of client solutions at Morningstar, emphasized the significance of such an approval from the SEC, suggesting it could be the standout news of 2024 and a pivotal event within the asset-management industry for years to come.

It’s worth noting that more U.S. fund managers are looking to minimize their tax liabilities by adopting the ETF share class model. With Vanguard’s patent having expired last year, six fund managers have already submitted applications to the SEC to introduce an ETF share class. Vanguard’s successful two-decade experience with ETF Share Class demonstrated effective tax minimization in compliance with regulations. However, Stacy Fuller, a partner at K&L Gates LLP, anticipates that the SEC will prioritize finalizing the swing pricing proposal before greenlighting multiple applications for ETF share classes.

The Growing Trend: Fund Managers Opting for ETF Conversion

In a recent interview, Jerome Powell, the current Chairman of the Federal Reserve, expressed concern over the sustainability of the US high debt levels. He emphasized the urgent need for significant measures to prevent future generations from being overwhelmed by financial burdens. As of late, the US national debt has surged past $34 trillion, with the nation’s attention divided between navigating global geopolitical tensions in the Middle East and the escalating conflict between Russia and Ukraine.