MS-PI

Morgan Stanley Series I preferred offers yield from the investment bank that has most successfully transformed itself into a wealth management-driven franchise. Under CEO James Gorman (and now Ted Pick), Morgan Stanley shifted its revenue mix from volatile trading to stable wealth and asset management, which now accounts for roughly half of revenue.

This transformation has made Morgan Stanley a fundamentally different — and safer — credit than the pre-2008 investment bank. Wealth management revenue is sticky, recurring, and largely uncorrelated with capital markets volatility. The firm manages over $6 trillion in client assets across E*TRADE, Morgan Stanley Wealth Management, and Eaton Vance.

MS-PI's yield premium over pure commercial bank preferreds reflects Morgan Stanley's historical identity as an investment bank, even though the firm's risk profile has converged significantly toward its commercial bank peers. For investors who recognize this transformation, the premium represents an opportunity.