Mutual Fund Creator MFS Files to Debut Its First ETFs
MFS Investment Management, the 100-year-old asset manager that created the first mutual fund, filed a registration statement on Monday with the Securities and Exchange Commission to debut its first exchange traded funds.
The firm, which is the largest fund provider by assets under management to not yet offer ETFs, is planning to introduce five active ETF versions of its popular mutual fund strategies, according to the filing.
MFS's initial ETF suite would include the MFS Active Value ETF, the MFS Active Growth ETF, the MFS Active International ETF, the MFS Active Core Plus Bond ETF, and the MFS Active Intermediate Bond ETF.
MFS first announced it was planning to launch ETFs last November. A spokesperson for MFS said the firm has been "evaluating the potential benefits of ETFs for a number of years."
As ETFs draw market share from mutual funds because of their liquidity and low fees, mutual fund providers have been exploring opportunities in the ETF space as a lifeline to maintaining assets. Active ETFs have particularly surged in popularity. Since 2018, they have had an annual organic growth rate of over 30%, according to Morningstar.
A spokesperson from MFS said that the firm “is seeing signs of long-term client demand for actively managed transparent ETFs." The firm said it anticipates the funds hitting the market in late 2024 or early 2025.
While the firm’s active ETF suite will likely attract financial advisors and retail investors seeking cheaper versions of their flagship mutual fund strategies, MFS is a relative latecomer to the skyrocketing ETF industry, which has dominated the investment landscape in recent years.
Last year, the ETF industry had 520 funds launch in 2023 and accrued nearly $9 billion in U.S. assets under management in the first quarter of 2024.
Competing for new assets can come down to fees, expertise, and a firm’s distribution networks. But legacy asset managers can be successful. Morgan Stanley, a fellow traditional mutual fund provider has accrued about $2 billion in assets in a little over a year since unveiling its first ETF.
MFS Mutual Fund Legacy
This year marked the 100-year anniversary of MFS creating the first ever open-end mutual fund, the Massachusetts Investors Trust (MIT), which launched in March 1924. Since then, the firm has accrued $630 billion in assets over its suite of mutual funds, SMA, and Collective Investment Trusts (CITs). According to the firm, it also helped Congress draft the first Investment Company Act of 1940.
A spokesperson for the firm said MFS is not planning on converting any of its existing mutual funds into ETFs.
Contact Lucy Brewster at lucy.brewster@etf.com.
