(Bloomberg) – The first mutual-to-ETF conversion has not even happened yet, and the company is already planning more.
Guinness Atkinson Funds wants to convert its Alternative Energy Fund into the SmartETFs Sustainable Energy exchange rental fund, according to a submission to the Securities and Exchange Commission this week.
It is the third product that the scientific fund provider has requested to switch after it asked in May to create the SmartETFs Dividend Builder and SmartETFs Asia Pacific Dividend Builder.
All three funds are pitched by sector standards, but each conversion would be the first of its kind and a milestone moment for asset management. Cash flowed to ETFs and away from mutual funds for old-school for years amid a general demand to cut costs and the disappointing performance of many active money managers.
Read more: Active managers have died the worst month in two years
Even index-linked mutual funds are not immune. They saw their first outflow for a semi-annual period in the six months through June, losing to ETFs with the widest margin ever, according to Bloomberg Intelligence.
While Guinness Atkinson is pursuing the first full mutual-to-ETF conversion, similar movements have begun elsewhere in the sector. Vanguard Group has converted some holdings to its lower cost ETFs, although these are structured as a share class within the fund’s fund.
The proposed sustainable ETF could invest in companies that support alternative as sustainable sources of energy, such as solar, wind, hydroelectric and geothermal, according to the submission. If approved, it would adopt the performance history of its predecessor, which was created in 2006 and has a payout ratio of 1.98%.
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