The launch puts Morgan Stanley head to head with other banks offering clients exposure to currency funds, including Deutsche Bank and Citigroup. But the Morgan Stanley offering is intended to be more exclusive than its competitors, with only a smaller number of premium quality managers included, the bank says. “Our clients are increasingly looking to diversify their portfolios, and FX is seen as a way of achieving this,” says James Rogers, executive director and head of the Gateway platform at Morgan Stanley. “But to do that effectively you need a lot of expertise, to identify the best strategies and the best managers.”
The platform will therefore offer investors daily transparency on manager performance and daily liquidity on exposure, to ultimately around 10 to 15 managers. So far it has signed up C-View, The Cambridge Strategy, Harmonic Capital and FDO Partners, with more expected to be added within weeks, including AllianceBernstein.
Clients can invest in all of these managers in a basket, or individually in whichever combinations they like. The managers on the platform offer versions of their funds tailored to a specific ¬– though undisclosed – volatility target, allowing for easy comparability between them.
Morgan Stanley acts as FX prime broker and distributor for the platform, with Mercer Investment Consulting, advisor and fiduciary of the platform, conducting the selection criteria, a standardised due diligence process and ongoing monitoring of currency managers.
Parker Global Strategies has invested in the platform and will run index products based on the Morgan Stanley managers, and offers any additional advice or information about the funds that clients need.
The Gateway platform allows clients to leverage Mercer’s research expertise, and specifically defined criteria gives them comfort that they are investing in premier managers, and that these managers will be monitored on an ongoing basis by people that understand the market.
In due course, the platform could be expanded to include macro funds and CTAs, Rogers says.