Morgan Stanley’s restructuring of its investment management unit appears to be moving forward, though it might not translate into any radical changes.
In a release Tuesday, Morgan announced it was dissolving 13 of its proprietary funds as part of its attempts to “streamline” its business for affluent investors. The Morgan board voted to eradicate seven of the firm’s mutual funds and six of its institutional funds (along with four of its managed portfolios). All of the dissolved proprietary funds were specifically tailored for affluent investors.
It is not known whether the funds were lagging behind other funds or whether Morgan was just simply folding them into other funds. But the release did say that “a boost in profitability” was an expected result of the closings.
Morgan Stanley has been criticized for its focus on its proprietary funds model and for the way it compensates its brokers for selling those funds. (See Registered Rep.’s April cover story, “Trouble in the House that Purcell Built?”
It’s unclear whether Morgan will lose any employees because of the move. The firm holds more than $462 billion under management, and through its Van Kampen Investments arm, its funds manage or supervise approximately $100 billion in assets.
Morgan Stanley did return calls at press time.