Insight Article Desktop Banner
 
 
Insight Article
  •  
February 23, 2022

Déjà vu in 2022 for the Securitized Market

Insight Video Mobile Banner
 
February 23, 2022

Déjà vu in 2022 for the Securitized Market


Insight Article

Déjà vu in 2022 for the Securitized Market

Share Icon

February 23, 2022

 
 

Despite an eventful 2021 which saw the competing forces of increasing vaccination rates offset by new COVID variants, and rising inflationary pressures met with a pivot of central bank policies, we enter 2022 with a similar outlook as we did the previous year. Much like in 2021 we expect there will be three essential drivers of solid performance in the securitized space in 2022: relatively short interest rate duration exposure, an underweight to agency mortgage- backed securities (MBS), and the improving fundamentals of the securitized credit markets.

 
 

1. Inflation and the Risk of Rising Interest Rates:

Rising inflationary pressures will be a dominant theme in 2022 in both the U.S. and Europe. While central banks have taken a more hawkish tone recently, we nonetheless expect financial conditions to remain relatively easy, despite the expected rate hikes in 2022. As a result, inflationary pressures should be less transitory than many market forecasts, and interest rates should rise further over the course of the new year. In our view, maintaining a relatively short interest rate positioning will be essential to successful returns in 2022 (Display 1) much like last year.

 
 
 
DISPLAY 1: Duration Versus 2021 Return
 

Source: MSIM, as of 31 December 2021. The indexes are provided for illustrative purposes only and are not meant to depict the performance of a specific investment. See pages 4-5 for Fund performance and index definitions.

The value of the investments and the income from them will vary and there can be no assurance that the Fund will achieve its investment objectives.

 
 

2. The Federal Reserve’s (Fed), and possibly the European Central Bank’s (ECB) tapering of asset purchases

2021 featured record gross and net issuance volumes of agency MBS fuelled primarily by the refinance wave, a result of plunging interest rates, and by strong home purchase activity.1 This record supply has been purchased entirely by a combination of the Fed and U.S. commercial banks, and as a result, MBS spreads have tightened more than 20 basis points (bps) from pre-pandemic levels. Since March 2020, the Fed has purchased over $2.8 trillion of MBS and increased their MBS holdings to $2.64 trillion in December.2 U.S. banks have also purchased large amounts of agency MBS as bank deposit growth remains high, increasing their net MBS holdings by $800 billion during the past 22 months to $2.94 trillion.3 With the Fed now accelerating its tapering of MBS purchases, and with bank demand for MBS likely to be reduced by slowing deposit growth, we expect Fed and bank MBS purchases to decline sharply in 2022. We also expect MBS supply to remain high given rising home pricing and increasing housing starts. The big question then for the MBS market is, who will fill the void left by the decline of Fed and bank buying?

In our view this market gap will be filled primarily by relative-value investors such as money managers during 2022. Considering that money managers’ MBS holdings are at their lowest levels in more than 20 years and that U.S. agency MBS spreads are tight compared to times when money managers were net buyers, we believe that spreads will need to widen materially in order bring money managers back into the market as buyers. And although we still prefer agency MBS to U.S. corporates (Display 2), we enter 2022 with an underweight to agency MBS, in favor of securitized credit opportunities, with the expectation for agency MBS spreads to widen this year.

 
 
 
DISPLAY 2: Both MBS and IG Corporate Spreads Appear Expensive, Especially When Compared With Securitized Opportunities
 

Source: Bloomberg, as of 31 December 2021. The indexes are provided for illustrative purposes only and are not meant to depict the performance of a specific investment. See pages 4-5 for Fund performance and index definitions.

 
 

3. Improving Securitized Fundamental Credit Conditions

Fundamental credit conditions remain robust in much of the securitized market, especially the housing and consumer credit sectors, and we believe that these conditions should drive strong performance in 2022. Over the past year, home prices are up 19% in the U.S., and between 6% to 10% across Europe, driven by a number of factors: an improving employment outlook; healthy household balance sheets; historically low mortgage rates helping home affordability; low housing supply; increasing housing demand from both the millennial generation (largest U.S. demographic cohort ever); the evolving work-from-home (WFH) dynamics.4 Consumer savings rates have seen record highs for much of the past two years and household balance sheets remain near their strongest levels in more than twenty years, while household debt levels also hover around historical lows.

The commercial real estate sector (CMBS) has been the most severely impacted by the pandemic, but sector challenges are evidencing substantial improvement as the pandemic eases and the economy slowly continues to normalize. While our views diverge materially by subsector and individual property, we expect further improvements across all areas of CMBS in 2022. Even in the most negatively impacted sectors, such as shopping centers and business-oriented hotels which appear less likely to fully recover even in a post-pandemic world, we expect to see further positive developments in 2022. We also have some uncertainties about office buildings and multifamily apartment buildings post-pandemic, given the ever evolving WFH dynamic, but the impact on these sectors is less severe and we again expect continued improvement. Logistics centers and warehouse spaces have been the area in CMBS that have experienced the most upside post-pandemic, benefitting from the sharp rise in e-commerce.

Opportunities and Challenges for Securitized Investors in 2022

Residential and consumer credit sectors remain our highest conviction trades for the upcoming year. As mentioned earlier, we expect the healthy fundamental credit conditions supporting the housing market and consumer balance sheets to remain strong, and believe attractive investment opportunities still exist. We expect home prices to continue to rise in both the U.S. and Europe, albeit at a more modest pace than in 2021, and for consumer credit conditions to remain quite solid, especially as the employment picture continues to improve.

New origination and issuance of residential mortgage-backed securities (RMBS) have increased significantly over the past year, and we expect continued healthy supply in 2022, creating a wide variety of residential-related investment opportunities. Consumer asset-backed securities (ABS) activity has also surged, although we currently do not see the same relative value opportunity in consumer ABS as we see in the various RMBS markets.

The more COVID-challenged sectors—commercial real estate, aircraft leases, and small business loans for example—continue to present credit concerns, especially if pandemic-related effects linger with new variants or a resurgence of COVID cases. While we believe these sectors could represent attractive recovery stories for 2022, we also approach these opportunities cautiously, keeping in mind that they also bear material risk should any of the aforementioned scenarios take place.

The Rationale for MSIM’s Approach to Securitized Assets

We believe that our securitized funds are favorably positioned to perform well in 2022 for three key reasons: Our strategies are actively managed with relatively low interest rate duration, have modest agency MBS exposure, and focus on those securitized credit sectors with solid fundamentals. In our minds, successful management of these areas will be critical in order to generate returns in the securitized market in 2022. More importantly however, our active and worldwide investment approach allows us to take advantage of evolving opportunities across the global securitized markets. The team actively invests across a variety of geographies and securitized asset classes, including agency mortgage-backed securities, non-agency residential mortgage-backed securities, commercial mortgage-backed securities, and asset-backed securities in the United States and globally. The flexibility of our investment approach allows us to reposition our portfolios, attempting to capitalize on the most attractive risk-adjusted opportunities across the world’s securitized markets, designed to deliver alpha from both active sector selection as well as specific security selection. The scenarios presented are an estimate of future performance based on evidence from the past on how the value of this investment varies, and/or current market conditions and are not an exact indicator. What you will get will vary depending on how the market performs and how long you keep the investment/product.

 
 
 
DISPLAY 3: MS INVF Global Asset Backed Securities Fund (Class Z) Average Annual Total Returns (USD)
 

Returns may increase or decrease as a result of currency fluctuations. All performance data is calculated NAV to NAV, net of fees, and does not take account of commissions and costs incurred on the issue and redemption of units. The sources for all performance and Index data is Morgan Stanley Investment Management. The Fund is actively managed, and the management of the fund is not constrained by or compared to a benchmark. Therefore, the management of the Fund is not constrained by the composition of the Benchmark.

 
 

1 Source: Bloomberg, as of December 31, 2021.

2 Source: N.Y. Federal Reserve

3 Source: Bloomberg, as of December 31, 2021.

4 Sources: S&P Case-Shiller Core-Logic Home Price Index & the ECB, as of December 31, 2021.


 
 

Applications for shares in the Fund should not be made without first consulting the current Prospectus and the Key Investor Information Document (“KIID”), which are available in English and in the official language of your local jurisdiction at morganstanleyinvestmentfunds.com or free of charge from the Registered Office of Morgan Stanley Investment Funds, European Bank and Business Centre, 6B route de Trèves, L-2633 Senningerberg, R.C.S. Luxemburg B 29 192. A summary of investor rights is available in English at the same website. If the management company of the relevant Fund decides to

terminate its arrangement for marketing that Fund in any EEA country where it is registered for sale, it will do so in accordance with the relevant UCITS rules.

 
 

Risk Considerations

There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the Portfolio will decline and may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this Portfolio. Please be aware that this Portfolio may be subject to certain additional risks. Fixed income securities are subject to the ability of an issuer to make timely principal and interest payments (credit risk), changes in interest rates (interest-rate risk), the creditworthiness of the issuer and general market liquidity (market risk). In a rising interest-rate environment, bond prices may fall and may result in periods of volatility and increased portfolio redemptions. In a declining interest-rate environment, the portfolio may generate less income. Longer-term securities may be more sensitive to interest rate changes. Mortgage- and asset-backed securities are sensitive to early prepayment risk and a higher risk of default, and may be hard to value and difficult to sell (liquidity risk). They are also subject to credit, market and interest rate risks. Certain U.S. government securities purchased by the Strategy, such as those issued by Fannie Mae and Freddie Mac, are not backed by the full faith and credit of the U.S. It is possible that these issuers will not have the funds to meet their payment obligations in the future. High-yield securities (“junk bonds”) are lower-rated securities that may have a higher degree of credit and liquidity risk. Derivative instruments may disproportionately increase losses and have a significant impact on performance. They also may be subject to counterparty, liquidity, valuation, correlation and market risks. Restricted and illiquid securities may be more difficult to sell and value than publicly traded securities (liquidity risk). ESG Strategies that incorporate impact investing and/or Environmental, Social and Governance (ESG) factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performance.

 
gregory.finck
Head of Securitized
Global Fixed Income Team
 
erin.glenn-profile
Portfolio Specialist
Global Fixed Income Team
 
 
 
 

INDEX DEFINITIONS

The Bloomberg Euro Investment Grade Corporate measures the investment grade, euro-denominated, fixed-rate bond market for corporate issues. Inclusion is based on currency denomination of a bond and not country of risk of the issuer. The Bloomberg Pan-European High Yield Index covers the universe of fixed-rate, sub-investment-grade debt denominated in euros or other European currencies (except Swiss francs). This index includes only euro-and sterling-denominated bonds, because no issues in the other European currencies now meet all the index requirements. To be included, the bonds must be rated high-yield (Ba1/BB+ or lower) by at least two of the following ratings agencies: Moody’s, S&P, Fitch. If only two of the three agencies rate the security, the lower rating is used to determine index eligibility. If only one of the three agencies rates a security, the rating must be high-yield. Bonds must have at least one year to maturity and an outstanding par value of at least EUR50 million. The index does not include non-rated bonds, and it excludes debt from entities in countries that are designated as emerging markets. The Bloomberg U.S. Corporate Index is a broad-based benchmark that measures the investment-grade, fixed-rate, taxable, corporate bond market. The Bloomberg U.S. Mortgage Backed Securities (MBS) Index covers the mortgage-backed, pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA) and Freddie Mac (FHLMC). This index is the mortgage-backed securities, fixed rate component of the Barclays U.S. Aggregate Index. The Bloomberg Global Aggregate Index provides a broad-based measure of the global investment grade fixed-rate debt markets. Total Returns shown in unhedged USD. The Bloomberg Euro Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, euro-denominated, fixed-rate bond market, including treasuries, government-related, corporate and securitized issues. Inclusion is based on currency denomination of a bond and not country of risk of the issuer. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index seeks to measure the value of residential real estate in 20 majo U.S. metropolitan areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington, D.C. 

“Bloomberg®” and the Bloomberg Index/Indices used are service marks of Bloomberg Finance L.P. and its affiliates, and have been licensed for use for certain purposes by Morgan Stanley Investment Management (MSIM). Bloomberg is not affiliated with MSIM, does not approve, endorse, review, or recommend any product, and does not guarantee the timeliness, accurateness, or completeness of any data or information relating to any product.

The indexes are unmanaged and do not include any expenses, fees or sales charges. It is not possible to invest directly in an index. Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto.

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results.

The views, opinions, forecasts and estimates expressed of the author or the investment team as of the date of preparation of this material and are subject to change at any time due to market, economic or other conditions. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product.

Certain information herein is based on data obtained from third-party sources believed to be reliable. However, we have not verified this information, and we make no representations whatsoever as to its accuracy or completeness.

This material is a general communication, which is not impartial, and all information provided has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Charts and graphs provided herein are for illustrative purposes only. Past performance is no guarantee of future results.

This material is not a product of Morgan Stanley’s Research Department and should not be regarded as a research material or a recommendation.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.

DISTRIBUTION

This material is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

MSIM, the asset management division of Morgan Stanley (NYSE: MS), and its affiliates have arrangements in place to market each other’s products and services. Each MSIM affiliate is regulated as appropriate in the jurisdiction it operates. MSIM’s affiliates are: Eaton Vance Management (International) Limited, Eaton Vance Advisers International Ltd, Calvert Research and Management, Eaton Vance Management, Parametric Portfolio Associates LLC, Atlanta Capital Management LLC, Eaton Vance Management International (Asia) Pte. Ltd.

This material has been issued by any one or more of the following entities:

EMEA: This material is for Professional Clients/Accredited Investors only.

In the EU, MSIM and Eaton Vance materials are issued by MSIM Fund Management (Ireland) Limited (“FMIL”). FMIL is regulated by the Central Bank of Ireland and is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at The Observatory, 7-11 Sir John Rogerson’s Quay, Dublin 2, D02 VC42, Ireland.

Outside the EU, MSIM materials are issued by Morgan Stanley Investment Management Limited (MSIM Ltd) is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No. 1981121. Registered Office: 25 Cabot Square, Canary Wharf, London E14 4QA.

In Switzerland, MSIM materials are issued by Morgan Stanley & Co. International plc, London (Zurich Branch) Authorised and regulated by the Eidgenössische Finanzmarktaufsicht (“FINMA”). Registered Office: Beethovenstrasse 33, 8002 Zurich, Switzerland.

Outside the US and EU, Eaton Vance materials are issued by Eaton Vance Management (International) Limited (“EVMI”) 125 Old Broad Street, London, EC2N 1AR, UK, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority

Italy: MSIM FMIL (Milan Branch), (Sede Secondaria di Milano) Palazzo Serbelloni Corso Venezia, 16 20121 Milano, Italy. The Netherlands: MSIM FMIL (Amsterdam Branch), Rembrandt Tower, 11th Floor Amstelplein 1 1096HA, Netherlands. France: MSIM FMIL (Paris Branch), 61 rue de Monceau 75008 Paris, France. Spain: MSIM FMIL (Madrid Branch), Calle Serrano 55, 28006, Madrid, Spain.

MIDDLE EAST

Dubai: MSIM Ltd (Representative Office, Unit Precinct 3-7th Floor- Unit 701 and 702, Level 7, Gate Precinct Building 3, Dubai International Financial Centre, Dubai, 506501, United Arab Emirates. Telephone: +97 (0)14 709 7158).

EVMI utilises a third-party organisation in the Middle East, Wise Capital (Middle East) Limited (“Wise Capital”), to promote the investment capabilities of Eaton Vance to institutional investors. For these services, Wise Capital is paid a fee based upon the assets that Eaton Vance provides investment advice to following these introductions.

Hong Kong: This material has been issued by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this material have not been reviewed nor approved by any regulatory authority including the Securities and Futures Commission in Hong Kong. Accordingly, save where an exemption is available under the relevant law, this material shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong. Singapore: This material should not be considered to be the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor under section 304 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”); (ii) to a “relevant person” (which includes an accredited investor) pursuant to section 305 of the SFA, and such distribution is in accordance with the conditions specified in section 305 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. This publication has not been reviewed by the Monetary Authority of Singapore. Eaton Vance Management International (Asia) Pte. Ltd. (“EVMIA”) holds a Capital Markets Licence under the Securities and Futures Act of Singapore (“SFA”) to conduct, among others, fund management, is an exempt Financial Adviser pursuant to the Financial Adviser Act Section 23(1)(d) and is regulated by the Monetary Authority of Singapore (“MAS”). Eaton Vance Management, Eaton Vance Management (International) Limited and Parametric Portfolio Associates® LLC holds an exemption under Paragraph 9, 3rd Schedule to the SFA in Singapore to conduct fund management activities under an arrangement with EVMIA and subject to certain conditions. None of the other Eaton Vance group entities or affiliates holds any licences, approvals or authorisations in Singapore to conduct any regulated or licensable activities and nothing in this material shall constitute or be construed as these entities or affiliates holding themselves out to be licensed, approved, authorised or regulated in Singapore, or offering or marketing their services or products. Australia: This publication is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. 314182, which accept responsibility for its contents. This publication, and any access to it, is intended only for “wholesale clients” within the meaning of the Australian Corporations Act. EVMI is exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of the provision of financial services to wholesale clients as defined in the Corporations Act 2001 (Cth) and as per the ASIC Corporations (Repeal and Transitional) Instrument 2016/396. Calvert Research and Management, ARBN 635 157 434 is regulated by the U.S. Securities and Exchange Commission under U.S. laws which differ from Australian laws. Calvert Research and Management is exempt from the requirement to hold an Australian financial services licence in accordance with class order 03/1100 in respect of the provision of financial services to wholesale clients in Australia.

Japan: For professional investors, this document is circulated or distributed for informational purposes only. For those who are not professional investors, this document is provided in relation to Morgan Stanley Investment Management (Japan) Co., Ltd. (“MSIMJ”)’s business with respect to discretionary investment management agreements (“IMA”) and investment advisory agreements (“IAA”). This is not for the purpose of a recommendation or solicitation of transactions or offers any particular financial instruments. Under an IMA, with respect to management of assets of a client, the client prescribes basic management policies in advance objectives and nature of risks before investing. As an investment advisory fee for an IAA or an IMA, the amount of assets subject to the contract multiplied by a certain rate (the upper limit is 2.20% per annum (including tax)) shall be incurred in proportion to the contract period. For some strategies, a contingency fee may be incurred in addition to the fee mentioned above. Indirect charges also may be incurred, such as brokerage commissions for incorporated securities. Since these charges and expenses are different depending on a contract and other factors, MSIMJ cannot present the rates, upper limits, etc. in advance. All clients should read the Documents Provided Prior to the Conclusion of a Contract carefully before executing an agreement. This document is disseminated in Japan by MSIMJ, Registered No. 410 (Director of Kanto Local Finance Bureau (Financial Instruments Firms)), Membership: The Japan Securities Dealers Association, the Investment Trusts Association, Japan, the Japan Investment Advisers Association and the Type II Financial Instruments Firms Association.

Morgan Stanley Distribution, Inc. serves as the distributor for Morgan Stanley funds.

Eaton Vance Distributors, Inc. (“EVD”), serves as the distributor for Eaton Vance and Calvert Funds.

IMPORTANT INFORMATION

This marketing communication has been issued by MSIM Fund Management (Ireland) Limited. MSIM Fund Management (Ireland) Limited is regulated by the Central Bank of Ireland. MSIM Fund Management (Ireland) Limited is incorporated in Ireland as a private company limited by shares with company registration number 616661 and has its registered address at The Observatory, 7-11 Sir John Rogerson’s Quay, Dublin 2, D02 VC42, Ireland.

This document contains information relating to the sub-fund (“Fund”) of Morgan Stanley Investment Funds, a Luxembourg domiciled Société d’Investissement à Capital Variable. Morgan Stanley Investment Funds (the “Company”) is registered in the Grand Duchy of Luxembourg as an undertaking for collective investment pursuant to Part 1 of the Law of 17th December 2010, as amended. The Company is an Undertaking for Collective Investment in Transferable Securities (“UCITS”).

Applications for shares in the Fund should not be made without also consulting the Annual Report and Semi-Annual Report (“Offering Documents”), or other documents available in your local jurisdiction and available free of charge from the Registered Office: European Bank and Business Centre, 6B route de Trèves, L-2633 Senningerberg, R.C.S. Luxemburg B 29 192. In addition, all Italian investors should refer to the ‘Extended Application Form’, and all Hong Kong investors should refer to the ‘Additional Information for Hong Kong Investors’ section, outlined within the Prospectus. Copies of the Prospectus, KIID, the Articles of Incorporation and the annual and semi-annual reports, in German, and further information can be obtained free of charge from the representative in Switzerland. The representative in Switzerland is Carnegie Fund Services S.A., 11, rue du Général- Dufour, 1204 Geneva. The paying agent in Switzerland is Banque Cantonale de Genève, 17, quai de l’Ile, 1204 Geneva. The document has been prepared solely for informational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy.

Information regarding expected market returns and market outlook is based on the research, analysis, and opinions of the team. These conclusions are speculative in nature, may not come to pass, and are not intended to predict the future of any specific MSIM investment. Past performance is no guarantee of future results.

Any index referred to herein is the intellectual property (including registered trademarks) of the applicable licensor. Any product based on an index is in no way sponsored, endorsed, sold or promoted by the applicable licensor and it shall not have any liability with respect thereto. The Fund is actively managed, and the management of the fund is not constrained by or compared to a benchmark. Therefore, the management of the Fund is not constrained by the composition of the Benchmark.

All investments involve risks, including the possible loss of principal. The material contained herein has not been based on a consideration of any individual client circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

The use of leverage increases risks, such that a relatively small movement in the value of an investment may result in a disproportionately large movement, unfavourable as well as favourable, in the value of that investment and, in turn, the value of the Fund.

Investment in the Fund concerns the acquisition of units or shares in a fund, and not in a given underlying asset such as building or shares of a company, as these are only the underlying assets owned.

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the applicable European regulation or Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.

MSIM has not authorised financial intermediaries to use and to distribute this document, unless such use and distribution is made in accordance with applicable law and regulation. MSIM shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary. If you are a distributor of the Morgan Stanley Investment Funds, some or all of the funds or shares in individual funds may be available for distribution. Please refer to your sub distribution agreement for these details before forwarding fund information to your clients.

The whole or any part of this work may not be directly or indirectly reproduced, copied, modified, used to create a derivative work, performed, displayed, published, posted, licensed, framed, distributed, or transmitted or any of its contents disclosed to third parties without MSIM’s express written consent.

All information contained herein is proprietary and is protected under copyright law.

This document may be translated into other languages. Where such a translation is made this English version remains definitive. If there are any discrepancies between the English version and any version of this document in another language, the English version shall prevail.

 

This is a Marketing Communication.

Morgan Stanley Investment Management (Australia) Pty Limited operates under AFSL No: 314182.

Not to be shown, quoted or distributed to the public. The information shown in this website is not personal advice and does not take into account the investment objectives, financial situation or needs of any person.

Information on this website should not be considered a solicitation to buy, an offer to sell or a recommendation for any security in any jurisdiction where such an offer, solicitation or recommendation would be unlawful or unauthorized. In addition, investments may not be made via this website.

Past performance of any product described on this site is not a reliable indication of future performance.


Privacy & Cookies    •    Terms of Use

©  Morgan Stanley | Investment Management (Australia) Pty Limited ACN 122040037