MFS Investment Management, a prominent player in the mutual fund industry and the creator of the world's first mutual fund, is set to make its foray into the exchange-traded funds (ETF) market. The Boston-based firm said on Tuesday that it plans to introduce its first ETF offerings as early as next year, with expectations to have products available by late 2024 or early 2025.
The move comes as MFS, currently the largest US mutual fund manager without an ETF option, aims to broaden its investment portfolio. The firm's upcoming ETFs will be transparent and actively managed, designed to complement its existing suite of mutual funds, retail separately managed accounts, and collective investment trusts. With this strategic expansion, MFS seeks to provide clients with a more diverse range of investment choices.
As of the end of September, MFS stands as the ninth-largest US mutual fund provider, managing assets worth $308 billion. Despite significant net outflows from US-domiciled mutual funds amounting to $656 billion over the past year up to September 30, MFS maintains a strong commitment to its traditional offerings. However, the industry is witnessing a shift, with active ETFs attracting $107 billion in net inflows during the same period.
Carol Geremia, president and head of global distribution at MFS, had previously indicated in September that the company was considering entering the ETF space in response to high investor demand and shifting market trends. Morningstar data corroborates this strategic direction, revealing that actively managed mutual funds experienced $713 billion in outflows for the year ended September 30, while active ETFs enjoyed growing popularity.
To support this new venture, MFS is actively recruiting for three pivotal positions: a head of ETF capital markets, an investment product specialist for ETFs, and a compliance lead specialist with prior experience in the ETF sector.
The broader market for US ETFs is robust, holding $7.16 trillion in assets as of September 30. A survey by ISS Market Intelligence forecasts that active ETFs will see an annualized growth rate of 16.5% in revenue from 2024 to 2028, potentially outpacing passive ETFs, index mutual funds, and active mutual funds.
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