Fuse Blog

Mutual Fund-to-ETF Conversion Net Flows

  • The first mutual funds to be converted into ETFs, which occurred during the first half of 2021, include two funds from Guinness Atkinson, one fund from Adaptive ETFs, and four from Dimensional Fund Advisors.
  • As noted in the exhibit, prior to conversion, mutual funds flows were mostly positive, with the exception of minor redemptions in 2012, and massive outflows in 2020.
  • Over the YTD period through September 2021, prior to conversion, mutual fund flows were in the red. Post conversion, flows turned the redemption tides, with the converted funds’ posting substantially higher sales than any yearly net flow since 2012.
  • Net assets for the converted funds also saw a sharp rise of 21% YTD, increasing from $24.3B to $29.6B.
  • In addition to the conversion, current industry trends are factors contributing to the sharp rise in inflows. The overall industry has experienced substantial redemptions from Large Blend mutual funds while ETFs in the category gathered inflows. A majority of the converted funds belong to the Large Blend category, contributing to the change in flows.

Mutual Fund-to-ETF Conversion Net Flows, 2012-September 2021 ($Millions)

conversion net flows blog 102621


Source: Morningstar, FUSE Research Network