The asset management arm of Morgan Stanley said the new product falls between "pure smart beta and pure fundamental equity investing".

Morgan Stanley Investment Management’s applied equity advisors team has launched the MS INVF US Active Factor Equity Fund, its first fund for European investors.

The SICAV fund seeks to deliver alpha by capturing outperformance versus the benchmark regardless of which investment style – value or growth – is in favour. Its allocation will be typically 100 per cent US with the flexibility to invest up to 20 per cent in non-US equities. The team will aim 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.

Morgan Stanley said a global core version of the portfolio is scheduled for release later this month. It will 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 main portfolio managers. They lead the applied equity advisors team, which managed assets of $5.1 billion across its strategies as of the end of March 2016.

“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,” said Slimmon.

“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,” added Paul Price, the firm's global head of client coverage.

The Luxembourg-registered fund is not yet widely available for sale and is awaiting registration in various markets.

Morgan Stanley Investment Management and its investment advisory affiliates had $405 billion in assets under management or supervision as of 31 March.