At a glance
MSSM charges 0.62% a year, above the 0.12% average of the 8 funds most like it (the most expensive of 9). It has $712.7M in assets, the 8th largest of that group; it paid 2.74% of its price in distributions over the past 12 months, annual. Over the past year it returned +14.2% with distributions reinvested (S&P 500: +11.5%), 7th of those 9 funds. Its ten largest positions make up 6.2% of the fund, out of 1,832 in all.
The short version
Morgan Stanley Pathway Small-Mid Cap Equity ETF (MSSM) is an actively managed fund. It splits its money among several outside managers, who pick stocks of small and mid-sized companies, mostly in the US. It held 1,832 stocks as of August 31, 2026. Its expense ratio is 0.62% after a fee waiver. That is the highest among nine similar funds, whose average is 0.12%.
Price history
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MSSM +14.2% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| MSSM official prospectus, to Dec 31, 2024 | — | +9.69% | — | +7.81% | +7.24% | — |
| Russell3000Index index, same period | — | +23.81% | — | +13.86% | +12.55% | — |
| Russell2500Index index, same period | — | +12.00% | — | +8.77% | +8.85% | — |
| MSSM price data to Oct 27, 2026 | +14.6% | +14.2% | — | — | — | +10.2% |
- Over the year to Oct 27, 2026, MSSM returned +14.2%, 7th of 9 among similar funds.
- Its worst full calendar year was 2025 (+11.3%); its best was 2025 (+11.3%).
- The deepest fall in its price history was 24.2% (Dec 9, 2024 to Apr 8, 2025), recovered by Aug 22, 2025.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | +14.6% | — |
| 2025 | +11.3% | — |
| 2024 | — | +9.69% |
| 2023 | — | +15.22% |
| 2022 | — | -18.24% |
| 2021 | — | +16.80% |
| 2020 | — | +20.67% |
| 2019 | — | +28.74% |
| 2018 | — | -11.08% |
| 2017 | — | +19.66% |
| 2016 | — | +4.92% |
| 2015 | — | -3.92% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Before this security existed |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Before this security existed |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2025 | $1.5900 |
What's inside
As of Aug 31, 2026, the fund held 1,832 securities; the ten largest made up 6.22% of assets.
| Holding | Weight | |
|---|---|---|
| ASCENDIS PHARMA A/S | 0.89% | |
| DYNATRACE INC | 0.82% | |
| TECHNIPFMC PLC | 0.67% | |
| VIASAT INC | 0.63% | |
| KBR INC | 0.63% | |
| REGAL REXNORD CORP | 0.53% | |
| AVIENT CORP | 0.52% | |
| IMAX CORP | 0.52% | |
| SPROUTS FARMERS MARKET INC | 0.52% | |
| VEECO INSTRUMENTS INC | 0.51% | |
| BRINKER INTERNATIONAL INC | 0.50% | |
| PLEXUS CORP | 0.50% | |
| HAEMONETICS CORP/MASS | 0.49% | |
| LIFE TIME GROUP HOLDINGS INC | 0.49% | |
| TEXAS CAPITAL BANCSHARES INC | 0.47% |
By country
United States 89.82%United Kingdom 1.69%Canada 1.29%Bermuda 1.11%Denmark 0.89%By asset type
Stocks 93.78%Real estate 4.19%Other 0.01%Preferred stock 0%What changed recently
- Over the three months to Aug 31, 2026, investors withdrew a net $44.3M (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +4.10%, -4.46%, +0.79%.
How it works
MSSM does not track an index. Morgan Stanley divides the fund's assets among professional money managers called sub-advisers. Each one picks stocks for its own slice. This "multi-manager" setup aims for capital appreciation, meaning growth in value rather than income. The prospectus compares results with the Russell 2500 Index and the Russell 3000 Index. It does not set a fixed weighting rule or rebalancing schedule. The sub-advisers decide what to own and how much.
Under normal conditions, at least 80% of net assets goes into small-mid cap stocks. The fund defines these as companies no larger than the biggest stock in the Russell 2500 or Russell Midcap Index over the previous 12 months, whichever is greater. Up to 10% can go into foreign companies that don't trade in the US. The fund may also lend out securities it owns to earn extra income. That adds a small risk if a borrower fails.
The result is very spread out. As of August 31, 2026, the 10 largest positions made up just 6.22% of assets. The biggest were Ascendis Pharma (0.89%), Dynatrace (0.82%) and TechnipFMC (0.67%). About 90% was in US companies and 0.81% in cash. Portfolio turnover was 45%, meaning the managers replaced a little under half the portfolio over the year.
What it really costs
- MSSM charges 0.62% a year, versus an average of 0.12% for the similar funds below (9th of 9, cheapest first).
- Of that, 0.75% is the management fee; the rest covers other fund expenses.
- The fee includes a 0.27% waiver from the adviser, which may end.
- Using the prospectus's standard example, $10,000 invested would cost about $265 in the first year and $3,195 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| MSSM | $265 | $869 | $1,500 | $3,195 |
In a retirement portfolio
It adds actively managed small- and mid-cap stocks that have swung more than the broad market, at a cost well above similar funds.
MSSM could add smaller companies to a portfolio built around large ones. The ETF shares launched in December 2024, so they missed the 2008, 2020 and 2022 downturns. The prospectus reports returns from before the launch, including an 18.24% loss in 2022 and a 26.41% drop in the first quarter of 2020. As an ETF, its deepest fall was 24.2%, from December 9, 2024 to April 8, 2025. It took about 4.5 months to recover, by August 22, 2025. Anyone forced to cash out near a low like that would lock in losses. The trailing yield was 2.74% as of October 27, 2026. It pays once a year, so it is not a steady income source. Its 0.62% expense ratio compares with a 0.12% average for similar funds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Investors who want one fund spread across 1,832 small and mid-sized companies, with no single stock above 1% as of August 31, 2026.
- People who prefer several professional stock pickers to an index fund and accept a 0.62% expense ratio for that active approach.
- Long-term holders who can sit through deep drops, like the 24.2% fall from December 2024 to April 2025.
Look elsewhere if
- Cost-focused investors: similar funds such as SCHM (0.04%) and BBMC (0.07%) charge a fraction of MSSM's 0.62% expense ratio.
- Anyone wanting steady income: the fund pays once a year, and its 2.74% trailing yield can change from year to year.
- Those wanting a strong record: the prospectus shows the fund trailing the Russell 2500 Index over 1, 5 and 10 years through 2024.
Close alternatives
Matched by holdings overlap from the latest N-PORT reports.
| Fund | Overlap | Cost | Net assets | 1 yr | 3 yr |
|---|---|---|---|---|---|
| MSSM this fund | — | 0.62% | $712.7M | +14.2% | — |
| BBMC JPMorgan BetaBuilders U.S. Mid Cap Equity E… | 34% | 0.07% | $2.03B | +16.5% | +22.2% |
| SCHM Schwab US Mid-Cap ETF | 33% | 0.04% | $14.86B | +20.5% | +18.9% |
| VB Vanguard Small Cap ETF | 33% | 0.05% | $188.70B | +16.1% | +19.7% |
| ESML iShares ESG Aware MSCI USA Small-Cap ETF | 32% | 0.17% | $2.98B | +16.5% | +21.3% |
| BKMC BNY Mellon US Mid Cap Core Equity ETF | 32% | 0.04% | $647.8M | +8.5% | +17.9% |
| JHMM John Hancock Multifactor Mid Cap ETF | 31% | 0.42% | $5.81B | +13.2% | +19.7% |
| SPMD SPDR Portfolio S&P 400 Mid Cap ETF | 29% | 0.03% | $18.39B | +15.3% | +16.6% |
Questions investors ask
Is MSSM an index fund?
No. MSSM is actively managed. Morgan Stanley hands portions of the fund to outside managers, called sub-advisers, and each one chooses stocks. At least 80% of net assets goes into small-mid cap companies. The fund defines these by the size of the largest stocks in the Russell 2500 or Russell Midcap Index. The prospectus compares performance with the Russell 2500 and Russell 3000 indexes, but the fund does not try to copy either one.
What is MSSM's expense ratio?
MSSM's expense ratio is 0.62%, according to the prospectus filed December 29, 2025. That includes a 0.75% management fee, partly offset by a 0.27% fee waiver, where the manager gives up part of its fee. MSSM ranks 9th of 9 on cost among similar funds, whose average is 0.12%. In the SEC's standard example, $10,000 earning 5% a year would cost $265 over one year and $3,195 over ten years.
MSSM vs BBMC: what's the difference?
The main differences are approach and cost. BBMC, the JPMorgan BetaBuilders U.S. Mid Cap Equity ETF, charges 0.07%. MSSM uses several active managers and charges 0.62%. About 34% of their holdings overlap, the most of any similar fund. Over the year to October 27, 2026, BBMC returned 16.5% and MSSM returned 14.2%. MSSM's mandate also reaches into smaller companies than a mid-cap fund's does.
Does MSSM pay dividends?
Yes, but only once a year. Over the 12 months to October 27, 2026, MSSM paid $1.59 per share, a trailing yield of 2.74%. A stock fund's payouts can include capital gains as well as dividends, so the amount can change a lot from year to year. The fund's stated goal is capital appreciation, not income, so it isn't built to give a steady payout.
How has MSSM performed?
MSSM returned 14.2% over the year to October 27, 2026. It returned 11.26% in 2025, its first full year as an ETF. The prospectus also reports returns from before the ETF launched in December 2024. As of December 31, 2024, it shows average annual returns of 7.81% over five years and 7.24% over ten years. Both trailed the Russell 2500 Index, at 8.77% and 8.85%.