Motley Fool Asset Management is jumping on the ETF conversion bandwagon with plans to convert two mutual funds that combine for more than $1 billion into exchange traded funds.
The $706 million MFAM Global Opportunities Fund (FOOLX) and the $330 million MFAM Mid Cap Growth Fund (TMFGX) will be converted to ETFs by the end of the year, the $1.7 billion asset manager announced Tuesday morning.
The funds will join Motley Fool Asset Management’s current ETF offerings, including the $527 million Motley Fool 100 ETF (TMFC) and the $187 million Small Cap Growth ETF (MFMS).
“Considering the current environment, ETFs are a more desirable and shareholder friendly structure,” said Arnold Reichman, chairman of Motley Fool’s service platform The RBB Fund, in a prepared statement.
The conversion plans come two weeks after Dimensional Fund Advisors Ltd. converted two more mutual funds that combine for more than $8 billion into ETFs.
In June, Dimensional became only the second U.S. issuer to pull off a conversion, transforming $29 billion worth of mutual funds into ETFs in an industry record. The asset manager — which controls $660 billion — has aggressively targeted the ETF universe since launching its first products last November, touting the structure’s tax advantages and client demand.
Citigroup analysts said in a June forecast that Dimensional’s conversions would be one of several factors behind a $21 trillion shift from mutual funds to ETFs over the next decade. Bloomberg Intelligence expects $1 trillion worth of such switches to take place over the next 10 years.
JPMorgan Asset Management has announced plans to switch four funds with $10 billion in assets into ETFs next year.
Todd Rosenbluth, head of ETF and mutual fund research at CFRA, said fund complexes are shifting toward the flow of investor assets.
“Investors have been shifting to the more tax efficient, low-cost ETFs over mutual funds in recent years, as such asset managers have begun to convert existing mutual funds to benefit from the scale and maintain the performance records rather than launch new products,” he said. “Dimensional Funds has converted the most amount of assets, but Guinness Atkinson was the first and JPMorgan is in the process of doing so with expected completion in early 2022.”
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