Financial services giant Morgan Stanley the nation’s No. 2 securities firm, will liquidate 17 of its proprietary funds as part of a larger effort to overhaul its investment management arm.

Members of the board of trustees for seven Morgan Stanley branded mutual funds, six institutional funds and four managed portfolios geared toward high-net-worth investors have approved the decision, the company said in a release.

The liquidations are part of the New York-based firm’s ongoing efforts to boost profitability by streamlining its fund products and selling more of its Van Kampen-branded funds through entities outside its own brokerage network. Former CEO of Wachovia Corp.'s Evergreen Investments Bill Ennis, now president of Morgan Stanley's investment management unit, has spearheaded the retooling process.

The firm’s mutual fund business has had a rough go due to a series of regulatory probes and a devastating three-year bear market. In November, the firm agreed to a $50 million settlement for taking secret payments from some fund companies to promote their products.

But with the major stock market indices vaulting higher over the last year, there has been a significant amount of cash coming off the sidelines, helping bring business back to a more normalized level.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.