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Morgan Stanley ETF first-month performance: pulls in $194 million, with zero net outflows

Morgan Stanley’s Bitcoin ETF absorbed $194 million in its first month, with no daily net outflows. This performance is unmatched by other spot Bitcoin funds in the same period.

On April 8, MSBT was announced as Morgan Stanley Digital Asset Strategy Head Amy Aldenberg said that this ETF had the strongest-ever ETF debut in the bank’s history, with net inflows of $30.6 million and trading volume of approximately $34 million. On its first day, Bloomberg senior ETF analyst Eric Balchunas ranked it in the top 1% among all ETF launches. Such a strong opening happened on the same day that overall performance of spot Bitcoin ETFs was poor, with net outflows reaching $94 million.

According to SoSoValue data analyzed by The Block, MSBT’s daily fund inflows remained in the millions of dollars during the initial two weeks, before gradually falling to single digits, but never dropping below zero. During the same period, the overall spot Bitcoin ETF market saw sharp volatility: inflows reached as high as $663.9 million on April 17, while on May 7 and 8 there were two consecutive days of outflows of $277.5 million and $145.7 million, respectively.

Based on SoSoValue data, on May 7, MSBT recorded $5.7 million in inflows, while BlackRock’s IBIT recorded -$27.2 million, Fidelity’s FBTC recorded -$97.6 million, and ARKB recorded -$26.6 million. MSBT’s trading price was at a 0.24% premium to its net asset value, higher than IBIT’s 0.18% and FBTC’s 0.13%, indicating market demand exceeded the supply of the issued units.

Within six trading days after its listing, MSBT had already recorded… total net inflows exceeded $103 million—surpassing WisdomTree’s BTCW fund’s cumulative total of $86 million since it began trading in January 2024.

Low fee angle

MSBT’s annual sponsor fee is 0.14%, the lowest among all U.S. spot Bitcoin ETFs, lower than Grayscale Bitcoin Mini Trust’s 0.15%, Bitw*se’s BITB at 0.20%, ARKB at 0.21%, and both IBIT and FBTC at 0.25%. Grayscale’s original GBTC still charges a 1.50% fee.

It is unclear whether fee discounts are the primary driver of MSBT investors’ stickiness. The 11 basis point fee difference between MSBT and IBIT may be negligible for retail investors, but for institutional investors, investing $1 billion each year creates a $1.1 million fee difference annually.

According to SoSoValue data, MSBT’s closest competitor, Grayscale Bitcoin Mini Trust (with a 0.15% fee), saw more volatile fund flows during the same period. It experienced at least one day of outflows, and daily inflows were generally smaller, even though it had net assets of $4.3 billion.

Advisor channel still waiting

According to the company, nearly all of MSBT’s inflows in its first month came from self-directed investment clients. Morgan Stanley has about 16,000 financial advisors managing more than $9.3 trillion in client assets, but the fund was not initially available on the firm’s advisory wealth management platform in the first few weeks.

Amy Aldenberg, head of Morgan Stanley Digital Assets, said: “In the first one or two weeks, it was almost entirely driven by clients themselves—meaning our advisors weren’t pitching these products,” at the Consensus conference in Miami.

Once this channel is fully operational, MSBT will gain a proprietary distribution channel that no other Bitcoin ETF issuer can match. The bank is also piloting cryptocurrency trading on E*Trade, with a trading fee of 50 basis points, supporting trading pairs such as BTC (Bitcoin), ETH (Ethereum), and Solana.

Broader market context

MSBT’s launch in its first month coincided with a full rebound in demand for spot Bitcoin ETFs. According to SoSoValue data, as of May 8, 13 U.S. spot Bitcoin funds have seen six consecutive weeks of net inflows exceeding $3 billion, setting the longest weekly net inflow streak since last summer. Total net assets in this category reached $106.6 billion, accounting for 6.67% of Bitcoin’s total market cap. Since the category was launched in January 2024, it has accumulated net inflows of $59.3 billion.

Balchunas predicts MSBT’s assets under management (AUM) could reach $5 billion within its first year. At the current growth rate, significantly accelerating inflows through the advisor channel will be necessary to achieve this target.