Just a head's up. We wrote about a potentially game-changing development early in the summer: the SEC had agreed, in principle, to allow an operating mutual fund to be repackaged whole as an ETF. A number of firms have launched ETF clones of still-operating funds, but the Guinness Atkinson decision was to move two of their funds intact into an ETF format. That move would allow them to substantially reduce expenses and marginally increase tax efficiency.
I talked with the head of Guinness Atkinson early this week, and he says they're close.
Today they launched SmartETFs Sustainable Energy II ETF (SULR) which is a clone of Guinness Atkinson Alternative Energy (GAAEX) which Morningstar puts in the "international small-mid value" box ... a fine assignment give-or-take the fund's special mandate, 33% US equity stake and growth orientation. In any case, the plan is to launch this ETF now, finish the conversion of the mutual fund into SmartETFs Sustainable Energy I early in 2021 then immediately merge the two.
By mid-December, they anticipate converting Guinness Atkinson Dividend Builder (GAINX) into an active ETF. The hang up has been "a thousand thoughtful questions and comments" from the SEC. They're at the point that the SEC is asking them to put specific dates (one of which is December 12) into the prospectus on file. They take that as a good sign.
And, before year's end, they anticipate launching SmartETFs Advertising Technology ETF.
GAINX deserves more attention, so this is a good thing for the firm and for investors. Similarly, this might offer a lifeline to other small mutual funds whose managers are capable but whose expense structure - much of which is dictated by the fact that it's classified as a mutual fund under the '40 Act - makes them virtually unmarketable.
For what interest that holds,