The folks at a 37-year-old, 800-employee, $572.1-billion-AUM (as of September 30), direct indexer in Washington State are powering up their third ETF. The new fund is also the 16th ETF from the direct indexer's parent: the $1.6-trillion-AUM asset management arm of a publicly traded Wall Street giant.

Thomas "Tom" Lee Parametric Portfolio Associates LLC Co-President, CIO

Last Friday (November 8), Brian Weinstein, head of global markets at Morgan Stanley Investment Management Inc. (MSIM) [profile], and Tom Lee, co-president and chief investment officer of Parametric Portfolio Associates LLC, unveiled the launch of the Parametric Equity Plus ETF (PEPS on the Nasdaq). New York City-based MSIM serves as PEPS' investment advisor, while Seattle-based Parametric (a MSIM subsidiary) serves as subadvisor.

PEPS' inception date was November 7 (last Thursday), and it comes with an expense ratio of 29 basis points. The new fund had $22.58 million in AUM as of yesterday (November 12).

The PM team for PEPS includes four Parametric managing directors (Larry Berman, Jennifer Mihara, James Reber, and Alex Zweber) and two senior investment strategists (Perry Li and Michael Zaslavsky). The new ETF is powered by a U.S. large-cap blend equity strategy.

Lee frames the launch of PEPS as the Parametric team meeting "client demand for [Parametric's] investment expertise in a vehicle that offers daily liquidity at a lower cost."

"This latest ETF strategy combines Parametric's industry-leading capabilities in options-based strategies and direct indexing to offer US large-cap equity exposure plus additional upside potential," Lee states.

Weinstein highlights that MSIM's ETF platform now has 16 ETFs (including PEPS) with more than $3.3 billion in combined AUM, "from both institutional and retail investors." (The MSIM team launched their ETF business in early 2023, and they added their first two Parametric-powered ETFs in October of that year.)

"MSIM's ETF platform continues to expand by introducing differentiated strategies that address the range of investor needs for accessing market exposures within an ETF structure," Weinstein states. "We are pleased with the strong growth ... and remain focused on building a comprehensive platform that reflects our distinct capabilities across asset classes."

PEPS is a series of Morgan Stanley ETF Trust. The new ETF's other service providers include: Dechert LLP as counsel; Ernst & Young LLP as independent accounting firm; ACA's Foreside Fund Services, LLC as distributor and principal underwriter; and JPMorgan Chase Bank N.A. as administrator, custodian, dividend disbursing agent, and transfer agent. 

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