MutualFundWire.com: MSIM Transforms a 39YO, $612MM-AUM Fund

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Tuesday, August 19, 2025

MSIM Transforms a 39YO, $612MM-AUM Fund

The folks at a publicly traded investment bank's 1,400-professional, $1.7-trillion-AUMS* asset management arm are expanding their two-year-old ETF business yet again, this time by transforming a 39-year-old, open-end mutual fund.

On August 4, Ally Wallace, global head of capital markets and ETF strategy at Morgan Stanley Investment Management (MSIM) [profile], confirmed that the Morgan Stanley Mortgage Securities Trust has been converted into the brand new Eaton Vance Mortgage Opportunities ETF (EVMO on the NYSE Arca). New York City-based MSIM continues to serve as investment advisor to the revamped fund, which now has about $612.27 million in AUM**.

The Morgan Stanley Mortgage Securities Trust's board approved the MF-to-ETF reorganization plan at a board meeting back in March 2025, and the fund's shareholders then gave their approval at a special shareholders meeting on June 11. The fund reorganized into the new ETF on August 1, as expected, and the new ETF listed on the exchange on August 4.

The predecessor mutual fund came in five flavors:

A shares (MTGAX), with a maximum sales load of 325 basis points, an expense ratio of 100bps, and requiring a $1,000 minimum initial investment;

L shares (MTGCX), with no load and an expense ratio of 130bps (though sales of L shares were suspended);

I shares (MTGDX), with no load, an expense ratio of 70ps, and requiring a $1 million minimum initial investment;

C shares (MSMTX), with a maximum deferred load of 100bps, an expense ratio of 180bps, and requireing a $1,000 minimum initial investment; and

R6 shares (MORGX), with no load, an expense ratio of 65bps, and requiring a $5 million minimum initial investment (though employer-sponsored benefit plans, like DC and DB plans, were exempt from that minimum).

The new ETF comes with an expense ratio of 45bps, lower than the prices of all the predecessor fund's share classes.

While transforming and rebranding the fund, the MSIM team also expanded the fund's PM team by adding Brandon Matsui, an executive director. The new ETF's other three PMs also PMed the predecessor mutual fund; those portfolio managers are:

Matt Buckley, managing director (who joined the fund's PM team in December 2022);

Greg Finck, co-head of MSIM's mortgage and securitized investment team, who joined the fund's PM team in January 2015); and

Andrew Szczurowski, managing director and co-head of the mortgage and securitized investment team (who joined the fund's PM team in March 2025).

The MF-to-ETF conversion also involved several vendor changes:

ACA's Foreside Fund Services, LLC took over as EVMO's distributor, succeeding Morgan Stanley Distribution, Inc.; and

JPMorgan Chase Bank, N.A. took over as EVMO's administrator, custodian, dividend disbursing agent, and transfer agent, succeeding MSIM (as administrator), State Street Bank and Trust Company (as custodian), Morgan Stanley's Eaton Vance Management (as co-transfer agent), and SS&C Global Investor and Distribution Soltuions, Inc. (as dividend disbursing agent and transfer agent).

Wallace puts the MF-to-ETF transformation in the context of the growth of MSIM's ETF platform, which a total of 18 ETFs (including 10 active fixed income ETFs) with more than $6 billion in combined AUM.

"We continue to focus on launching best-in-class investment strategies in the ETF wrapper," Wallace states.

Finck describes "MBS and other securitized assets" as adding "a diversifying element to investor portfolios, especially those that are heavily exposed to U.S. corporate credit."

"The MBS and securitized markets ... offer a nuanced way to access fixed income markets that isn't reliant on the business cycle," Szczurowski states.

EVMO is now on its sixth name. The predecessor fund launched as Dean Witter Government Securities Plus on November 20, 1986. On August 17, 1992, the fund rebranded as the Dean Witter Federal Securities Trust. On June 22, 1998, the fund added the Morgan Stanley name, rebranding to the Morgan Stanley Dean Witter Federal Securities Trust. On June 18, 2001, the fund dropped the Dean Witter name, rebranding to the Morgan Stanley Federal Securities Trust. And on June 22, 2005, the fund rebranded to the Morgan Stanley Mortgage Securities Trust.

EVMO is an actively managed series of Morgan Stanley ETF Trust. The transformed fund is keeping several of its predecessor's providers, including:

Dechert LLP as counsel;

Ernst & Young LLP as independent accounting firm; and

MSIM as investment advisor.