Morgan Stanley drops Vanguard mutual funds from platform

Will continue to sell Vanguard's ETFs; says culling aims to reduce 'less popular' funds.
MAY 04, 2017

Morgan Stanley is dropping mutual funds from Vanguard from its platform. Reuters reports that Morgan Stanley will not force its clients to liquidate any of their current holdings in Vanguard funds, but starting Monday, the firm's advisers will stop selling Vanguard funds, the company said. The firm's clients, however, will be able to add money to their existing Vanguard investments through the first quarter of 2018, the wirehouse said. Client assets held in Vanguard mutual funds represent a small percentage of all Morgan Stanley client assets in mutual fund investments, the brokerage firm said. Last month, Morgan Stanley said it would reduce the mutual funds it offers by 25%, to 2,300 funds in an effort to reduce the number of underperforming and less popular funds. Morgan Stanley will continue to offer Vanguard exchange-traded funds. Vanguard, the world's second largest money manager after BlackRock, does not pay wealth management firms for the distribution of its funds as some other money managers do. Vanguard spokeswoman Emily Farrell said that while it was "unfortunate" that Morgan Stanley advisers won't have access to Vanguard's mutual funds, the popularity of its ETFs continues to increase. ​

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