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Morgan Stanley Investment Management Thrives in 2Q15

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Real estate business

Morgan Stanley’s (MS) Investment Management segment reported a 7% increase, bringing total revenues to $751 billion compared to $705 billion in 2Q14. The growth was mainly due to higher gains on investments in the Merchant Banking & Real Estate Investing business. The division reported pretax income from continuing operations of $220 million. In 2Q14, pretax income was $209 million.

The division now manages assets totaling $403 billion, which increased by $8 billion but which were partially offset by outflows of $4 billion during the quarter. Compensation expenses for the current quarter increased to $308 million from $293 million a year ago, principally due to an increase in deferred compensation associated with carried interest. Non-compensation expenses also increased to $223 million from $203 million a year ago.

Morgan Stanley’s operating margins for the past twelve months stood at 9.46%. Here’s how its peers compare:

  • Goldman Sachs (GS) – 30.8%
  • JPMorgan Chase (JPM) – 31.9%
  • Bank of America (BAC) – 8.1%
  • Wells Fargo (WFC) – 40.2%

Together, these banks account for approximately 28% of the Financial Select Sector SPDR Fund (XLF).

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Investment Management division

Morgan Stanley manages funds for clients through traditional asset management, alternative investments, merchant banking, and real estate investing activities. The company’s offerings include equity, fixed income, money market funds, alternative investments, real estate investment, and merchant banking across the globe. Morgan Stanley tailors its offerings to the needs of institutional and retail investors.

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