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Morgan Stanley Investment Management’s AEA team launches first fund for European investors

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Morgan Stanley Investment Management has launched the US Active Factor Equity Fund, the first time the firm’s Applied Equity Advisors (AEA) investment team’s strategies have been available to European investors in SICAV fund format.

The launch complements Morgan Stanley Investment Management’s existing equity investment capabilities, broadening the firm’s product offering to address an increasing client demand for concentrated and core products globally and in the US.
 
The US Active Factor Equity Fund seeks to deliver alpha, by capturing outperformance versus the benchmark regardless of which investment style – value or growth – is in favour. 
 
Based on a truly active management approach, it offers investors a comprehensive and flexible way to capture returns through the fund management team’s flagship investment process; a combined top-down and bottom-up decision process in conjunction with factor modelling, while always maintaining a high active share. The team’s framework seeks to capture 70 per cent of the market’s returns using factor-based investing, with a dynamic stock selection overlay to drive high active share investing for the other 30 per cent.
 
The US Active Factor Equity fund’s allocation is typically 100 per cent US with the flexibility to invest up to 20 per cent in non-US equities. A Global Core version of the portfolio, based on the same truly active management approach, is also tabled for release later this month. The Global Core Portfolio will generally consist of 30 to 60 stocks and typically invest at least 40 per cent in non-US equities under normal market conditions.
 
Chicago-based Andrew Slimmon and Phillip Kim will be the key portfolio managers, leading an experienced team established in 2004, which draws upon the resources and reach of Morgan Stanley Investment Management to provide clients with professionally managed discretionary portfolios. The AEA team manages AUM of USD5.1 billion across its strategies as of 31 March 2016.
 
The MS INVF US Active Factor Equity fund, registered in Luxembourg, is not yet widely available for sale and is awaiting registration in various markets.
 
Andrew Slimmon (pictured), senior portfolio manager, says: “We believe our team’s investment style and philosophy offer European investors extremely attractive added value, especially in the current market environment. Equity markets are returning to an era when experienced and high conviction stock pickers are the most effective and efficient way for investors to obtain strong, long lasting results.”
 
Paul Price, global head of client coverage, adds: “We are now in a world where the dialogue has shifted towards the use of factor based analysis. We believe there is demand for a differentiated style of investing that offers a distinct approach that falls between pure smart beta and pure fundamental equity investing.”

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