Harbor Capital Completes Industry’s First ETF Mutual Fund Merger

According to the report, as ETFs have garnered inflows from asset managers’ traditional mutual funds, these managers have tried to adapt by first launching active ETFs that mimic existing mutual funds and then converting their mutual funds into ETFs, according to the report.

The completion of the first mutual fund merger with an existing ETF marks the emergence of a new strategy, the report says.

“I would argue that this is a natural evolution of the flows that take place between mutual funds and ETFs,” Mr. Jim said in a March 3 interview.

Harbor believes the ETF structure offers investors “structural advantages over mutual funds such as cost efficiency, liquidity and tax efficiency,” said Steve Cook, managing director and head of ETFs at Harbor Capital, in an emailed comment. Pensions and investments representative.

“We also think that the manager of the (BlueCove) SIHY ETF offers investors a unique investment strategy/philosophy that has performed well and the combination of the two has been very attractive,” Cook said, referring to Harbor Scientific Alpha. High yield ETF by ticker.

The assets of the two funds were merged on February 27, Mr. Cook said, and Harbor believes the merger marks the first time a mutual fund has merged with an existing ETF.

As of March 3, the Harbor Scientific Alpha High-Yield ETF had $151 million in assets under management, according to the Harbor website. Shortly before the merger, he said, the mutual fund’s assets were $117 million, while the ETF’s assets were about $32 million.

When asked if Harbor was planning any additional mergers, Mr. Cook did not rule out the possibility.

“Harbour is constantly redefining our product line to provide our clients with the best experience across all asset classes,” Mr. Cook said, adding: “If we believe there is an opportunity to offer our investors a better product/structure, we will. .”

Brian Armor, director of passive strategy research in North America at Morningstar Research Services, a subsidiary of Morningstar, said Harbor’s is the first mutual fund-ETF merger he knows of.

“Like conversions, there will probably be more of them in individual cases where it makes sense, but I don’t expect to see a big wave of them,” Mr. Armor said in an email dated March 3.

As of December 31, Harbor had approximately $37.3 billion in assets under management.

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