Morgan Stanley IM’s applied equity advisors team launches first fund for Lux’ investors

Morgan Stanley Investment Management has launched the Morgan Stanley Investment Funds (MS INVF) US Active Factor Equity Fund, making the Applied Equity Advisors (AEA) investment team’s strategies available in SICAV fund format for the first time to European investors. The launch broadens the firm’s product offering to address an increasing client demand for concentrated and core products globally and in the US. The US Active Factor Equity Fund seeks to deliver alpha, by capturing outperformance versus the benchmark regardless of which investment style–value or growth–is in favour.

“We are now in a world where the dialogue has shifted towards the use of factor based analysis. We believe there is demand for a differentiated style of investing that offers a distinct approach that falls between pure Smart Beta and pure fundamental equity investing,” explains Paul Price, global head of Client Coverage. Based on an active management approach, it offers investors a comprehensive and flexible way to capture returns through the fund management team’s flagship investment process; a combined top-down and bottom-up decision process in conjunction with factor modelling, while always maintaining a high active share. The team’s framework seeks to capture 70 percent of the market’s returns using factor-based investing, with a dynamic stock selection overlay to drive high active share investing for the other 30 percent.

The US Active Factor Equity fund’s allocation is typically 100 percent US with the flexibility to invest up to 20 percent in non-U.S. equities. A Global Core version of the portfolio, based on the same truly active management approach, is also tabled for release later this month. The Global Core Portfolio will generally consist of 30 to 60 stocks and typically invest at least 40 percent in non-U.S. equities under normal market conditions.

Chicago-based Andrew Slimmon and Phillip Kim will be the principle portfolio managers. The AEA team manages AUM of $5.1bn across its strategies as of the end of March.

The MS INVF US Active Factor Equity fund, registered in Luxembourg, is not yet widely available for sale and is awaiting registration in various markets.