Core Portfolios | Automatic Investment Management (2024)

Most retail E*TRADE from Morgan Stanley brokerage and retirement accounts with a US address can enroll in Core Portfolios. Eligible accounts include:

Brokerage:

• Individual
• Joint
• Custodial

Retirement:

• Rollover IRA
• Traditional IRA
• Roth IRA

SEP IRA:

Please note the program is not available for trusts, charitable organizations, corporations, institutional and business accounts.

For each asset class (such as equities or fixed income), MSSB selects investment holdings that, when combined in broad-based asset allocation strategies, seek to provide a high level of return potential for a given level of risk over the long term, generally three years or longer. That’s called risk-adjusted return potential.

Each investment selection is made by analyzing a spectrum of key data points, including but not limited to historical performance, expenses, tracking error, and liquidity. MSSB leverages the work of the Morgan Stanley Global Investment Managers Analysis group in creating opinions on ETFs held in your Core Portfolios account. Portfolio holdings are monitored regularly and replaced as necessary.

New clients (External transfer)

You can fund your account by making a cash deposit or transferring securities. Securities transferred to fund an account will generally be liquidated upon receipt. We can accept certain types of securities for deposit at our discretion. Please note that this could result in a taxable event.

Existing clients (Internal transfer)

You can fund your account using cash or existing securities. Securities transferred to fund an account will generally be liquidated upon receipt. We can accept certain types of securities for deposit at our discretion. The intra-firm transfer tool on the Move Money page will allow you to easily transfer a portion or the full value of an existing account into a new Core Portfolios account. As an added benefit, all transactions will be processed commission-free and the proceeds will be used to fund your recommended portfolio. Please note that this could result in a taxable event.

Step 1:Complete an investor profile questionnaire and suitability application

Answer a short series of questions about your investment objectives, time horizon, and risk tolerance that will help us make an investment recommendation.

Step 2: Customize your portfolio

You can further personalize your portfolio with additional investment strategies like socially responsible (SRI and ESG) and smart beta ETF investments.

Step 3: Review your recommended portfolio

We will then present you with an investment proposal in which we recommend an investment strategy based on the results of your investor profile questionnaire. You may choose to accept our recommendation or select a different investment strategy for your account by retaking the investor profile questionnaire. You will have to attest to your new investment objective and risk tolerance needs to align with the new portfolio you chose.

Step 4: Implement your plan

Open and fund your Core Portfolios account.

Here’s how the investments are managed:

• The Investment Solutions Investment Committee (ISIC) utilizes. an investment analysis methodology that incorporates various quantitative criteria, including historical return, risk, expenses, manager tenure, performance and style consistency, and asset size and growth, to select securities held in the investment portfolios.
• MSSB uses a systematic algorithm to determine your recommended portfolio of ETFs based on answers to your Investor Profile Questionnaire. The goal is to select the appropriate investment portfolio based on an investor’s investment objectives risk tolerance, and time horizon.
• Core Portfolios is checked daily for opportunities to rebalance. If your portfolio drifts too far, generally by 5% or more, from your target allocation and when material deposits or withdrawals are made, our portfolio management team will automatically rebalance your investments to help keep the account on track.
• Access to a dedicated support team is just a phone call away. For any questions about the Core Portfolios program, please call the Core Portfolios support team available weekdays from 8:30 a.m. to 8:30 p.m. ET at 1(866)-484-3658.

For additional information, please see theMS Core Portfolios ADV Brochure.

MSSB follows a disciplined investment strategy based on principles of Modern Portfolio Theory (MPT). MPT is a widely utilized framework for building diversified investment portfolios. The underlying philosophy of MPT is to contrast a portfolio with a combination of asset classes (e.g., US equity, international equity, fixed income) based on the expected returns and volatility that these asset classes have displayed over time.

Combining different asset classes may help limit risk and increase returns of the investment portfolio as the classes have varying levels of correlation to one other. Many of the assumptions made in MPT rely on historical data, which may not be representative of the future, potentially leading to unexpected outcomes. All portfolio holdings will be selected by E*TRADE Capital Management's investment strategy team based on multi-stage due diligence by Global Investment Committee.

Once you have selected your portfolio, you can further customize your strategy based on your investing preferences.

Core Portfolios (Smart Beta): Want a more active portfolio strategy? We’ll allocate a portion of your assets to a smart beta ETF – a type of ETF that favors equities with certain characteristics which may help enhance your overall returns. Factors, or specific characteristics of stocks that have performed well historically, are utilized to select stocks. This strategy also combines elements of active and index investing.

These strategies seek to outperform a benchmark index and typically aim to enhance returns or minimize risk relative to a traditional market-capitalization-weighted benchmark. An ETF employing a smart beta strategy may have higher portfolio turnover which may indicate higher transactions costs relative to its benchmark. Utilizing smart beta strategies does not guarantee against underperformance relative to a more traditional market-capitalization-weighted benchmark.

Core Portfolios (Socially Responsible): Looking to align your investing with your personal values? We’ll adjust your portfolio to include an ETF that focuses on companies known for their environmental, social, and governance practices.Socially responsible ETFs invest to a specific mandate, including incorporating SRI criteria into investment analysis; screening for companies that adhere to environmental, social, or governance standards; or fixed income ETFs focused on community impact securities.

SRI strategies may eliminate or limit exposure to investments in certain industries or companies that do not meet certain environmental, social, or governance criteria. As a result, the ETF may underperform other funds or an appropriate benchmark that do not have an SRI focus.

Tax-sensitive investment strategy is available in Core Portfolios account.

Tax-sensitive investment strategy utilizes municipal bond ETFs that may help reduce taxes incurred on interest and dividends associated with those portfolios.All brokerage accounts are automatically enrolled in a tax-sensitive portfolio. Once enrolled in Core Portfolios, you can update this feature at any time. IRAs and other tax-advantaged account types are also eligible for Core Portfolios.