Morgan Stanley (NYSE:MS) has been aggressively increasing its reach in the brokerage and wealth management businesses, first with the recently completed acquisition of E*Trade and now with the planned acquisition of Eaton Vance (NYSE:EV). In this October 19, 2020 Fool Live clip from our "Industry Focus: Financials" show, host Jason Moser and Fool.com contributor Matt Frankel, CFP, talk about these moves and what they mean for investors.
Jason Moser: Well, speaking of investment banking, let's talk a little bit about Morgan Stanley. I think the thing that stood out to me with Morgan Stanley really was the Eaton Vance acquisition they announced. I mean, that's a pretty big deal. It's going to bring a good chunk of change under their umbrella in regard to assets under management and give them a little bit more of an ESG presence, which I think is very forward thinking. But what stood out to you from Morgan Stanley's quarter?
Matt Frankel: It's interesting. Goldman Sachs (NYSE: GS) and Morgan Stanley are the two biggest investment banks in the country, and they are really going two different directions when it comes to bringing their brands to the masses. Goldman's doing the commercial thing with markets and the Apple (NASDAQ: AAPL) Card, things like that. Whereas Morgan Stanley's pushing into the brokerage space on the retail level. They they just finalized the acquisition of E*Trade. They're buying out Eaton Vance, the asset manager. What really stood out to me, I mentioned, equity underwriting when we were talking about Goldman, how IPOs have just been off the chart, Morgan Stanley's equity underwriting revenue more than doubled from the same quarter a year ago.
Jason Moser: Wow.
Matt Frankel: That's pretty impressive and just indicates just how active, I guess, you'd say the IPO market has been this year. Trading revenue was strong up 20 percent year-over-year. They earned more than the market had expected. The revenues were up 16 percent year-over-year. The key takeaway I had from Morgan Stanley is that they had a very strong quarter. They weren't quite what Goldman was in terms of just a blowout record-setting quarter. But that's just because some of their business works a little bit differently, especially on the investment side. Goldman has a big portfolio of investments and Morgan Stanley relies on a little bit less on things like that. But I couldn't find that much I didn't work in Morgan Stanley's report.
Jason Moser: Yeah. It seems like consolidation is certainly going to be a big theme of their strategy going forward, at least in the near-term. That Eaton Vance acquisition, they saw as essentially inevitable that if they didn't do it someone else would, and I'd imagine they're already looking around to see what else they might be able to bring into their universe as well.