Dimensional Fund Advisors has disclosed the timeline and other details for converting four actively managed mutual funds to four active ETFs, with which it announced in November. The conversions involve an estimated $26 billion in total assets.
The firm previously announced plans to convert six mutual funds into ETFs. No word yet on when the two other mutual funds —Tax-Managed International Value Portfolio and TA World ex US Core Equity Portfolio — will be converted.
All of the four conversions that were disclosed will take place on or about June 11, structured as tax-free reorganizations and result in lower fees for investors. Investment strategies and objectives as well as portfolio managers will remain unchanged.
The four conversions are as follows:
- Tax-Managed U.S. Equity Portfolio, with a 0.18% management fee, into the Dimensional U.S. Equity ETF, with a 0.08% management fee
- Tax-Managed U.S. Small Cap Portfolio, with a 0.40% management fee, into the Dimensional U.S. Small Cap ETF, with a 0.30% management fee
- Tax-Managed U.S. Targeted Value Portfolio, also with a 0.40% management fee, into the Dimensional U.S. Targeted Value ETF, also 0.30% management fee
- T.A. U.S. Core Equity 2 Portfolio (0.20% management fee) into the the Dimensional U.S> Core Equity 2
Each ETF will also charge another 0.03% or 0.04% for additional expenses.
At conversion, each share of the mutual fund will be exchanged for a share of equal value of the new ETF.
Guinness Atkinson Sets Date for First Mutual Fund-to-ETF Conversions
Months before DFA converts some of its mutual funds to ETFs, Guinness Atkinson Asset Management will have already done so, albeit with two funds whose total assets are only a fraction of the DFA funds, around $25 million. Its conversions of two mutual funds to ETFs will be the first in the industry and are set to take place on March 26.
The Guinness Atkinson Dividend Builder Fund will become the SmartETFs Dividend Builder (DIVS) and the Guinness Atkinson Asia Pacific Dividend Builder Fund will become the SmartETFs Asia Pacific Dividend Builder (ADIV).
“This move represents the culmination of a dialogue we’ve had with our shareholder base, who like many are increasingly attracted to the benefits of ETFs, including their lower costs and greater flexibility,” said Jim Atkinson, CEO of Guinness Atkinson Asset Management, in a statement.
After the conversion, the expense ratio of the Dividend Builder fund will decline from 0.68% to 0.65%; and the fees for the Asia Pacific Dividend Builder fund will drop from 1.12% to 0.78% — both effective until at least June 30, 2024.
The strategies and portfolio management of the funds will remain unchanged. DIVS invests in about 35 dividend-paying companies globally that provide inflation-adjusted cash flow return on investment of at least 10% in each of the last 10 years. ADIV does the same but for only mature companies in the Asia Pacific region.
The new ETFs will join the firm’s roster of three other actively managed ETFs: SmartETFs Smart Transportation & Technology Fund (MOTO), SmartETFs Sustainable Energy II (SULR) and SmartETFs Advertising & Marketing Technology (MRAD).
J.P. Morgan Asset Management Launches Short-Duration Bond ETF
J.P. Morgan Asset Management has introduced the JPMorgan Short Duration Core Plus ETF (JSCP), is an actively managed fixed income ETF designed to deliver total return via investments in investment-grade and non-investment grade short-term fixed income securities.
The ETF targets a duration of three years or less and under normal conditions will invest at least 70% of holdings in assets that at the time of purchase are rated investment grade. These include investment-grade corporate debt as well as U.S. Treasurys, mortgage- and asset-backed securities, high-yield and emerging markets debt.