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Morgan Stanley Ditches Certain Vanguard Funds

May 4, 2017

Morgan Stanley will no longer offer mutual funds from the Vanguard Group, says Reuters, citing media reports.

Morgan Stanley brokers will stop selling Vanguard’s mutual funds as of Monday, a Morgan Stanley spokeswoman tells Reuters in an email. The intent of the move is to trim less popular and underperforming funds, she tells the newswire. She adds that Vanguard’s funds make up just a small percentage of Morgan Stanley client assets in mutual funds.

Morgan Stanley said last month it plans to cut its mutual fund offerings by 25% to 2,300 funds, according to Reuters.

But the brokerage will continue offering Vanguard’s exchange-traded funds, the newswire writes. Morgan Stanley clients, meanwhile don’t have to sell their Vanguard mutual funds, the spokeswoman tells Reuters. They can continue adding money to existing Vanguard investments through the first quarter of next year, the newswire writes.

Vanguard had $342 billion in net inflows over the past 12 months, with the bulk of them going into exchange-traded funds and passively managed index funds, according to Reuters.

The firm can keep costs low in part because it refuses to pay distribution fees to wealth management firms, the newswire writes. A Vanguard spokeswoman tells Reuters it’s “unfortunate” its mutual funds will no longer be offered by Morgan Stanley brokers, but says Vanguard’s ETFs will continue attracting attention.

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The move comes days after Vanguard announced that it’s cutting fees on three more mutual funds and 14 exchange traded funds while raising them on one mutual fund.

By Alex Padalka
  • To read the Reuters article cited in this story, click here.