(Bloomberg) — After launching the world’s first mutual fund 100 years ago, MFS Investment Management is preparing to debut in the ETF market.
The firm has filed to create five actively managed exchange-traded funds covering stocks and bonds, according to reports on Monday, the strongest sign yet that low-cost trading vehicles are taking over the investing landscape. Filing and the Securities and Exchange Commission.
Their arrival will be a landmark moment in the field of asset management. So far, Boston, Massachusetts-based MFS is one of the few companies that has declined to participate in the $8.6 trillion ETF market. The company is home to the Massachusetts Investors Trust, which was launched in 1924 as the first-ever open-end mutual fund.
Mutual funds have been losing market share to younger, more well-rounded competitors for years. tectonic shift The changing investment climate is forcing even the most old-school managers to embrace new packaging. Capital Group, Neuberger Berman Group LLC and Grantham Mayo Van Otterloo are among the companies that have entered the ETF space in the past three years.
MFS managed about $630 billion as of the end of March and was one of the last major companies not to issue an ETF.
“Every investment manager needs an ETF solution at this point because the growth rate is undeniable,” said Strategas Securities ETF analyst Todd Sohn. “Mutual funds will play a role for now, but ETFs remain the present and future of many investment managers. ”
Mutual funds lost about $656 billion in 2023, while ETFs saw $578 billion in inflows, according to Investment Company Institute data compiled by Bloomberg. The trend has continued into 2024, with a total of $65 billion flowing out of mutual funds, while ETFs have absorbed more than $230 billion so far this year.
MFS said it still saw long-term demand for its existing vehicles, but the move was in response to interest in the ETF format.
“We believe offering active ETFs will complement our existing offering of investment vehicles and provide investors with more choice,” a spokesperson said in an email.
The company filed filings for the MFS Active Core Plus Bond ETF, MFS Active Growth ETF, MFS Active Intermediate Muni Bond ETF, MFS Active International ETF and MFS Active Value ETF. Fees and ticker symbols for these funds are not yet listed.
Although active ETFs have Flourish Having gained popularity over the past few years – attracting around $73 billion in 2024 alone – and with firms such as Capital Group successfully launching “building block” products, the planned funds will tap into mature areas of the industry. Sohn believes attracting new assets can be tricky given how crowded the U.S. market is, with nearly 3,500 ETFs currently trading.
“I assume they have a group of clients who are interested in these strategies in the form of ETFs and will invest in them,” Sohn said. “But given the incredible saturation, getting external funding can be challenging.”
