JPMorgan to convert another US$2b of mutual funds to ETFs

JPMORGAN’S asset management arm filed to convert four more mutual funds with assets of about US$2 billion into exchange-traded funds (ETFs). 

The plans follow the success of the firm’s first four conversions in June and would bring JPMorgan’s US ETF lineup to 50 funds. The funds slated to be changed are two municipal bond funds, one short-dated bond fund and one equity fund, according to a press release.

“We think one of the big benefits of conversion versus other options is the ability to carry over track records. And these funds have seriously long track records,” said James Seyffart, ETF analyst at Bloomberg Intelligence. 

Two of the funds set to switch, the US$243 million JPMorgan Sustainable Municipal Income Fund, and the US$1.1 billion JPMorgan Limited Duration Bond Fund, have been trading for nearly 30 years, which make them ripe for conversion.

“These funds are also more likely to have little to no exposure in 401k or retirement type accounts when compared to many other funds, which makes the ETF conversion more attractive,” Seyffart added. 

The boards of each mutual fund will consider the conversions in February 2023, and if approved, the funds will become ETFs in July, according to the release. 

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Since Dimensional Fund Advisors kicked off one of the first formal mutual fund-to-ETF flips in June 2021, 38 mutual funds with a combined US$62 billion in assets have converted to ETFs, according to Bloomberg Intelligence. It estimates that number could ratchet up to US$1 trillion over the next 10 years as more asset managers favour typically lower-cost, more tax-efficient ETFs. BLOOMBERG