Morgan Stanley's proprietary retail mutual funds are continuing to lose assets this year, losing $4 billion in the first quarter. This comes on top of steep outflows in 2005, The Wall Street Journal reports. In addition, its Van Kampen fund family, which Morgan sells through a variety of outside channels, is beginning to lose assets this year, as well, bleeding $161 million year-to-date.

Nonetheless, Morgan says it is firmly committed to its retail asset management business and looking to expand it by acquiring specialty firms--particularly in the alternative asset, international and institutional realm--to round out its portfolio. "We are very intent on doing that," Morgan Chief Financial Officer David H. Sidwell told analysts during a recent conference call. "You will see us do it through a variety of things, from adding one or two individuals, which we did in the first quarter, to adding small teams to small bolt-ons.

"And I am using the word 'small' purposely because I think that' sour expectations, that's what we are going. We are looking at a number of potential bolt-ons," Sidwell said.

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