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Industry people: Mutual funds may be converted to ETFs

In the US, two mutual funds are being converted to ETFs, which may kick off a wave of conversions according to industry experts.

Photo: ANGELA WEISS/AFP / AFP

Two US fund managers are currently changing their traditional mutual funds to exchange-traded funds (ETFs). According to the Financial Times, this may be a general tendency which can completely alter the investment funds landscape.

Last week, Texas-based Dimensional Fund Advisors (DFA) announced it would turn six funds into ETFs in the following year. In total, they have around USD 20bn (EUR 16.8bn) in assets under management.

Additionally, Guiness Atkinson, which is a small California-based asset manager, has stated that its first action in the new year will be the conversion of two mutual funds. The hold around USD 21m in AUM.

"I think in hindsight we could very well look back at this moment and say this is a significant trend," the director of global ETF research at Morningstar Ben Johnson tells FT.

Investors are increasingly opting for ETFs over traditional mutual funds in the US, so this conversion of funds may be used to draw investors into an pre-existing setup, instead of establishing the mutual funds from scratch.

"It’s very unusual for people to do what DFA is doing, but I think it’s the right thing to do. I think more people could do it if they can show it works. The ETF is giving the investor a better product for less money," says Procure Holdings President Robert Tull.

English Translation: Nielsine Nielsen

(This article was provided by our sister media, FinansWatch Denmark)

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