• Through October 2022, there have been 36 mutual fund-to-ETF conversions from 17 different firms, representing total AUM of over $58 billion. Assets are concentrated among a few managers at this early stage in the trend, with one firm, Dimensional Fund Advisors, accounting for more than 80% of converted assets.
• YTD active mutual funds, excluding fund-of-funds, have seen net outflows of $771 billion while their active ETF counterparts have witnessed net inflows of $64 billion. This has prompted many managers to explore converting funds in order to stem outflows and potentially generate new inflows, with Fidelity most recently announcing plans to convert six thematic mutual funds into ETFs.
• Challenges include minimal improvement in net flows for most converted funds, substantial operational challenges at the broker/dealer level, limited interest in the retirement space, as well as current assets coming from existing mutual funds and concentration within Ultra Short strategies.

Converted Mutual Funds, 1Q21 – October 2022

Source: FUSE Research Network, Morningstar, SEC Filings