What You Need to Know
- Two actively managed Guinness Atkinson Asset Management mutual funds have been converted into lower-cost ETFs.
- The funds' shareholders “are increasingly attracted to the benefits of ETFs,” Guinness Atkinson's CEO says.
- More mutual fund conversions into ETFs are expected; DFA is planning four conversions around mid-June.
The growing U.S. ETF industry marked another milestone Monday when the first ETFs converted from mutual funds started trading.
They are Guinness Atkinson Asset Management’s SmartETFs Dividend Builder (DIVS) and its SmartETFs Asia Pacific Dividend Builder (ADIV), which were converted from the the firm’s Dividend Builder Fund ( GAINX) and Asia Pacific Dividend Builder Fund (GAADX), respectively. Both are actively managed ETFs.
The conversions were automatic and non-taxable events for shareholders, and the fees of the new ETFs are lower than those of their mutual fund predecessors — 0.65% for DIVS versus 0.68% for GAINX and 0.78% for ADIV versus 1.12% for GAADX until at least through June 2024.
A ‘Better Value for Investors’
“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. He noted that the firm chose the two mutual funds that were converted to ETFs based on their “defined, rule-based strategies that are complementary as part of a broader equity asset allocation” and that “are attractive to many investors seeking dividends.”
Atkinson told ThinkAdvisor in December that he had “come to the conclusion that ETFs are a better value proposition for investors.”
The investment approach and portfolio managers of the new ETFs are the same as those of their mutual fund predecessors.
The Smart ETFs Dividend Builder ETF invests in dividend-paying companies that have had an inflation-adjusted cash flow return on investment of at least 10% in each of the last 10 years. The Smart ETFs Asia Pacific Dividend ETF invests in dividend-producing stocks of mature companies in the Asia Pacific region.