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Dimensional, JPMorgan Flip Billions From Mutual Funds Into ETFs

The two money managers alone will account for about $55 billion of switched assets when their conversions are complete.

(Bloomberg) -- The money-management industry is making fresh moves to bail from mutual funds as quant-investing pioneer Dimensional Fund Advisors and JPMorgan Asset Management flip billions more dollars into the comparatively low-cost world of ETFs.

The Dimensional US Marketwide Value exchange-traded fund (ticker DFUV) debuts at the start of the week after ending Friday as the Tax-Managed U.S. Marketwide Value Portfolio II Fund. The $8 billion product is the last of a series of conversions kicked off by the Austin, Texas-based firm back in June.

Meanwhile, the JPMorgan Market Expansion Enhanced Equity ETF (JMEE) also begins trading Monday after closing last week as the JPMorgan Market Expansion Enhanced Index Fund. The $927 million vehicle is the second of four conversions by the Wall Street giant which are expected to complete in June and total about $9 billion.

All told the two money managers alone will account for about $55 billion of switched assets when their conversions are complete. The pair are at the vanguard of a trend that could see as much as $1 trillion shift as investors increasingly gravitate toward typically lower-cost, more tax-efficient ETFs, according to Bloomberg Intelligence. 

More than $240 billion has exited mutual funds in 2022 so far as ETFs have absorbed nearly $200 billion, Investment Company Institute data show.

For Dimensional, founded by David Booth, the latest switch catapults ETF assets to more than $54 billion, placing the firm among the 10 largest issuers, according to Bloomberg data. 

The systematic giant has expanded aggressively in the $6.5 trillion market after launching its first product in late 2020, a move driven by demand from clients that include financial advisers, institutional investors and sovereign wealth funds. 

“If you exclude the conversions, our clients invested more than $10 billion of new assets into our ETFs in the first 18 months since we entered the market, making us the fastest growing issuer in the industry,” Gerard O’Reilly, co-chief executive officer and chief investment officer, said in an email. “Our strong start is indicative of our clients’ interests in investing in Dimensional’s consistent philosophy within an ETF structure and of Dimensional addressing those needs with the right solutions.”

DFUV holds mainly financials and health-care stocks selected from the Russell 3000 Index. The ETF is actively managed and carries an expense ratio of 0.23%.

JMEE is also actively managed and targets small- and mid-caps. It charges 0.24%.

Read more: History Made as First Mutual Fund Converts Into an ETF

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