BlackRock set for first mutual fund-to-ETF switch

BlackRock set for first mutual fund-to-ETF switch
The global asset management firm is converting a $700M dividend strategy amid pervasive investor demand for tax-efficient fund structures.
APR 22, 2024

The ongoing tsunami of mutual fund-to-ETF conversions has finally reached BlackRock.

The world's largest asset manager has bared plans to convert its BlackRock International Dividend Fund, currently holding assets worth over $700 million, into an exchange-traded fund by November.

This shift, which BlackRock revealed in a prospectus supplement filed with the SEC, reflects a growing industry trend where asset managers transition mutual fund assets to ETFs to leverage their lower costs and tax benefits.

Eric Balchunas, a senior analyst at Bloomberg Intelligence, noted that approximately 70 funds, including offerings from Dimensional Fund Advisors, JPMorgan Asset Management, and Fidelity Investments, have transitioned over $100 billion in mutual fund assets into ETFs.

The wave of conversions underscores a broader investor preference for ETFs due to their enhanced flexibility and investment efficiency.

A recent report from TrackInsight, conducted in partnership with State Street and JPMorgan, found that assets allocated to ETFs reached $11 trillion in 2023, with a notable preference for active ETFs in North America.

“Global investors are telling us they are allocating more to active ETFs, would be more apt to purchase a strategy if it was converted from a mutual fund to ETF, and would like to see global regulators enable a listed ETF as a share class of an unlisted fund,” Francis Koudelka, senior vice president & global etf product specialist at State Street said at the time.

Recent data from the Investment Company Institute, as compiled by Bloomberg, indicates significant capital movements within the industry. Over $65 billion has been withdrawn from mutual funds, while ETFs have attracted more than $250 billion in 2024 alone, continuing a trend from the previous year.

The ongoing transition is also influenced by regulatory changes, with firms such as Dimensional and Morgan Stanley seeking the SEC’s blessing to offer ETF shares of their existing mutual funds, aiming to enhance tax efficiencies and potentially help make assets within mutual funds stickier.

High-quality bonds a bargain compared to stocks, says Schroders portfolio manager

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.