Jacques Chappuis, head of Morgan Stanley’s fund-of-funds business, Alternative Investment Partners, will leave the firm in May.

Arthur Lev will replace Chappuis as head of AIP in addition to his role leading the company’s long-only asset-management business, according to a memo from Greg Fleming, 49, who oversees the bank’s asset-management division. Matt Burkhard, a spokesman for the New York-based firm, confirmed the contents of the memo, a copy of which was obtained by Bloomberg News.

Chief executive officer James Gorman, 54, said soon after he took over in 2010 that "there’s no reason" Morgan Stanley couldn’t have the world’s largest fund-of-funds business. AIP has about $29 billion of assets under management and advisement, a 53 percent increase over the last three years, according to the memo. Blackstone Group LP’s Alternative Asset Management, which has $46 billion in assets under management, calls itself the world’s biggest.

AIP manages portfolios of hedge funds, private-equity and real-estate funds, helping investors spread their money across holdings. Mustafa Jama leads AIP’s hedge-fund group, while Thomas Dorr heads private-equity investments and David Boyle and Paul Vosper run the real estate group. Rui De Figueiredo leads AIP’s portfolio solutions group.

Chappuis is leaving to pursue "other interests," according to the memo.

Lev previously held roles as chief strategy officer of Morgan Stanley’s traditional asset-management unit and general counsel of Morgan Stanley Investment Management. He left Morgan Stanley in 2002 to join Greenwich, Connecticut-based FrontPoint Partners LLC, returning in 2006 when the bank bought the hedge fund.