NYSE confirms mutual funds flocking to convert to ETFs amid global momentum

NYSE engaging with mutual funds to swap to ETFs
Updated: 19 Sep, 2021
3 mins read

The New York Stock Exchange is reportedly seeking to have several mutual funds converted into the now popular exchange-traded funds (ETFs). The exchange is already engaging several assets managers on the possibility of turning to the ETF market.

Douglas Yones, Head of Exchange Traded Products at NYSE, told the Traders Magazine that ETFs carry more benefits for mutual funds that will opt for a swap, and the exchange has systems in place to offer guidance.

The official notes that the targetted mutual funds already have significant assets under management that will perform well as ETFs. 

“You get to keep your fund’s track record; you get to keep your performance history. A lot of mutual funds have impressive levels of assets under management, so you come directly into the ETF marketplace with significant size and scale, which can be really beneficial for asset managers that may be new to the space,” said Yones.

Yones says that by turning to ETFs, funds would enjoy added benefits such as reduced operating expenses while leveraging on the model for an asset manager.

Several managers have agreed to turn to ETFs

He acknowledged that several asset managers have agreed to the swap, and there is a likelihood others will follow suit. In June, Dimensional Funds converted about $30 billion mutual funds into ETFs. The asset manager unveiled its mutual funds as ETFs on the New York Stock Exchange. Notably, the conversion remains one of the largest to date. 

Yones pointed out that despite the exchange having structures in place for the swapping, the process is also rigorous and calls for commitment, especially from the regulatory side. 

He added that NYSE already posses a model set up for active asset managers intending to shift to ETFs. 

Furthermore, the NYSE move comes as the trend of swapping mutual funds with ETFs continues to gain momentum globally. Recently, JP. Morgan Asset Management announced the conversion of select U.S. mutual funds to ETFs in 2022. Mr. Yones said:

“We couldn’t be more excited. This is probably the most dynamic time that I’ve ever seen. It’s never been easier, more efficient and faster for asset managers to enter the market,”

NYSE’s latest ETF focus also follows the recent growth in the sector, with Yones noting that the exchange has captured 91% of all ETFs while launching 162 ETFs this year.

Notably, most ETFs across the actors have recorded significant returns. In 2021, Direxion Daily Retail Bull 3X Shares (NYSEARCA: RETL), MicroSectors U.S. Big Banks Index ETNs (NYSEARCA: BNKU), and Breakwave Dry Bulk Shipping ETF (NYSEARCA: BDRY) rank as the top three ETFs to deliver over 100% returns, while global ETFs hit a record inflow of capital at $639 billion in H1 2021.

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.