Fuse Blog

Mutual Fund-to-ETF Conversion Update

  • As of August 31, 2022, assets in ETF that were converted from mutual funds reached $57 billion in AUM through a total of 29 conversion. Post-conversion, the majority of funds have seen little change with regard to their AUM and net flows. However, seven funds converted by DFA are the exception, bringing in $5.4 billion in net flows YTD while maintaining their AUM despite the current market downturn.
  • Based on the conversions that provided estimates on the cost of conversion, the cost to convert a mutual fund to an ETF is $100K-$150K, on average, for funds with domestic assets. For funds with international assets, conversion costs can rise sharply and exceed $1 million.
  • On average, the new ETFs are significantly cheaper than their mutual fund predecessors, with their net expense ratios and management fees reduced by 41.7% and 12.8%, respectively. This reduction in fees far exceeds the cost of conversion, which is often less than 1 basis point of a fund’s AUM.

Mutual Funds Converted to ETFs AUM ($Billion), 2020 – August 2022

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Note: Mutual Fund AUM represents funds pre-conversion. ETF AUM represents funds post-conversion.

Source: FUSE Research Network, Morningstar, SEC Filings