Harbor Capital targets mutual fund conversions in major ETF push

(Bloomberg) – Harbor Capital Advisors appears poised to join the growing ranks of fund managers turning mutual fund assets into ETFs.

The company with about $63 billion in total expects at least one of its products to be replaced by an exchange-traded fund this year, according to Steve Cook, managing director of ETF capital markets at Harbor.

After launching its first ETFs in 2021, the Chicago-based firm aims to have as many as 12 by the end of the year, as it expects a major US industry breakthrough of $6.9 trillion. dollars.

“Market trends dictate that asset managers and investment managers need to be where the flows are going,” Cook said in an interview. “There is certainly evidence that ETFs, on the wealth front, have garnered most of the flows and it continues to accelerate.”

Investors have been turning away from mutual funds and toward ETFs for years, especially in the equity market, and the fund management industry is following. This trend crystallized last year with the historic first conversion of Los Angeles-based Guinness Atkinson Asset Management in March.

Since then, quantitative giant Dimensional Fund Advisors has jumped up the list of largest ETF issuers after returning about $29 billion of its mutual funds. Franklin Templeton is transferring about $250 million in assets this year, while JPMorgan Asset Management expects about $10 billion in conversions.

Read more: David Booth’s Dimensional is already the largest active ETF company

Although Cook does not speculate on how many assets can be traded or from which funds, conversions could be key to the success of Harbor’s ETF.

The Harbor Long-Term Growers ETF (ticker WINN) became the company’s fourth when it launched this month. The growth-focused fund — run by a Jennison Associates team from Sig Segalas, where ETF star Cathie Wood spent nearly two decades — has joined the Harbor Disruptive Innovation ETF (INNO), the Harbor Scientific Alpha Income ETF (SIFI) and the Harbor Scientific Alpha High Yield ETF (SIHY). All four debuted in the last six months or so.

Collectively they are off to a slow start, with combined assets of around $73 million. Meanwhile, Harbor Capital Appreciation Fund — with a similar large-cap, growth-focused strategy to WINN — has nearly $35 billion in assets across its share classes, according to Bloomberg data.

“We believe and anticipate that Harbor will eventually seek to convert some mutual funds to ETFs,” Cook said. “We’re excited about some of the insights this can bring, where it’s good for shareholders.”

–With help from Katie Greifeld.

Dolores W. Simon