MutualFundWire.com: Morgan Stanley Transforms a 28YO Income Fund
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Thursday, November 13, 2025

Morgan Stanley Transforms a 28YO Income Fund


The team at a $1.8-trillion-AUMS* asset management are expanding their $9-billion-AUM** ETF business to 18 funds in total by converting a 28-year-old, open-end mutual fund.

On Monday (November 10), Ally Wallace, global head of capital markets and ETF strategy at Morgan Stanley Investment Management [profile], and Andrew Szczurowski, co-head of the mortgage and securitized investment team at MSIM, revealed that the MSIM team has converted the Morgan Stanley Income Opportunites Fund into the new Eaton Vance Income Opportunities ETF (XAGG on the NYSE Arca). New York City-based MSIM will continue to serve as investment advisor to the freshly converted fund.

The Morgan Stanley Income Opportunities Fund debuted on July 28, 1997. The fund's board approved the transformation in April 2025, the fund reorganized as an ETF last Friday (November 7), and the new ETF listed on the exchange on Monday.

XAGG now has about $299.48 million in AUM***, and it comes with an expense ratio of 50 basis points (which bakes in a 5bps fee waiver promised through November 7, 2027.) By comparison, the predecessor fund came in five flavors:
  • A shares (DINAX), with a maximum up-front load of 325bps and an expense ratio of 90bps;
  • C shares (MSIPX), with a maximum deferred load of 100bps and an expense ratio of 165bps;
  • I shares (DINDX), with an expense ratio of 60bps;
  • L shares (DINCX), with an expense ratio of 124bps; and
  • R6 shares (MGFOX), with an expense ratio of 52bps.

    • The predecessor fund's PM team included:
  • Justin Bourgette, managing director, who joined the portfolio management team in May 2025;
  • Michael Kushma, managing director, who joined the PM team in April 2014;
  • Brian Shaw, executive director, who joined the PM team in May 2025; and
  • Szczurowski, managing director and lead portfolio manager, who joined the PM team in May 2025.
    • Brandon Matsui, executive director, is joining the PM team for XAGG, and all four other PMs are staying on. However, Kushma will leave the new ETF's PM team on December 31, 2025.

    ACA's Foreside Fund Services, LLC serves as distributor and principal underwriter for XAGG, replacing Morgan Stanley Distribution, Inc., which served the predecessor fund. JPMorgan Chase Bank, N.A. serves the new ETF as administrator, custodian, dividend disbursing agent, and transfer, replacing Morgan Stanley's Eaton Vance Management (co-transfer agent to the predecessor fund), SS&C Global Investor and Distribution Solutions, Inc. (dividend disbursing and transfer agent to the predecessor fund), and State Street Bank and Trust Company (custodian and securities lending agent to the predecessor fund).

    Dechert LLP serve as counsel for the predecessor fund and will continue to do so for XAGG. Ernst & Young LLP served as independent accounting firm for the predecessor fund and will continue to do so for the new ETF.

    Wallace describes the conversion and the launch of XAGG as "another milestone in the expansion of [MSIM's] ETF platform and commitment to offering investors best-in-class, actively managed fixed income strategies in the ETF structure." She hints at future conversions, too.

    "We continue to look across our platform for dynamic investment strategies that address investor needs and resonate in today's marketplace," Wallace states.

    Szczurowski puts XAGG in the context of what he describes as the importance of offering "a multisector approach to help investors navigate the shifting market and take advantage of emerging opportunities."

    XAGG is an actively managed series of Morgan Stanley ETF Trust.

    *As of September 30, 2025.

    **As of October 31, 2025.

    ***As of yesterday (November 12, 2025).


    Printed from: MFWire.com/story.asp?s=70697

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