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J.P. Morgan to Convert $10B in Mutual Funds to ETFs

J.P. Morgan follows in the footsteps of Guinness Atkinson and Dimensional Fund Advisors with its plan to convert four equity mutual funds into similar active transparent ETFs next year.

J.P. Morgan Asset Management announced plans Wednesday to convert four mutual funds, totaling $10 billion in assets, to actively managed exchange traded funds in 2022.

If the funds’ boards approve the move, the firm will convert the following into similar active transparent ETFs: the JPMorgan International Research Enhanced Equity Fund, the JPMorgan Market Expansion Enhanced Index Fund, the JPMorgan Realty Income Fund and the JPMorgan Inflation Managed Bond Fund.

“As a leading active manager, it is important to us that we continue to deliver our investment capabilities in the vehicle that meets our clients’ desired outcomes,” said Bryon Lake, head of Americas ETFs, in a statement. “The intraday liquidity, transparency and potential tax benefits that come with ETFs carry significant value to many investors, and these particular strategies are well suited for the ETF structure.”

In addition, the boards of J.P. Morgan’s mutual funds and ETFs have asked shareholders to elect a 16-member executive team to oversee all J.P. Morgan funds. That change would take effect early next year, if approved.

There’s a growing interest among asset managers to convert their existing open-end mutual funds into exchange traded funds, especially with the rise of nontransparent active structures.

The prize of converting is large for asset managers who have been playing defense, as more recent ETF entrants attract new money coming into the market; a conversion pathway would allow them to port over the fund’s assets, track record and performance.

Guinness Atkinson Funds became the first asset management firm in history to convert two of its mutual funds into ETFs in March.

In June, Dimensional Fund Advisors converted four equity mutual funds, with $29 billion in assets, into ETFs.

Fund administrator and private label issuer The Nottingham Company got approval in April to convert mutual funds managed by Adaptive Investments into exchange traded funds.

TAGS: Mutual Funds
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