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  • Donate through PayPal Early Innings .... Wild Card in the Race (Guinness Atkinson MF > ETF Conversion)

edited July 2020 in The Bullpen

Most of the above is a discussion of recent rollout of active, non-transparent ETFs. However, the final section ("Wild Card") includes a brief comment on Guinness Atkinson's upcoming conversion of existing mutual funds to ETFs, concluding:
[The conversion] ... may still blaze a path forward for any mutual fund company to decide to convert an active, non-fully transparent mutual fund into an active, non-fully transparent ETF.

If such a mutual-fund-to-ETF could be offered with a reasonable bid/ask spread and 20+ basis points in a lower annual expense ratio, the appeal to do so may prove irresistible. Not so much because the fund manager will automatically assume that the new wrapper will make it easier to raise new assets; rather, because using the new wrapper may help protect the fund manager from losing existing assets to ETFs and other products. In baseball terminology, this is a defensive switch, not an offensive switch.
This was originally discussed by David in his June 2020 "Mice That Roared" commentary:

PS: The author of the "Early Innings" piece is a retired ETF executive. In February 2020, he discussed Mutual Fund to ETF conversion in an interview that appeared here:
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