Guinness Atkinson Asset Management has completed the conversion of two mutual funds to actively managed ETFs which have begun trading on NYSE Arca under the firm’s SmartETFs brand.
The conversion to ETFs was processed using SEC Rule 6c-11, known informally as the ‘ETF Rule’.
In a non-taxable event for shareholders, the Guinness Atkinson Dividend Builder Fund and Guinness Atkinson Asia Pacific Dividend Builder Fund have been recast as the SmartETFs Dividend Builder (DIVS US) and SmartETFs Asia Pacific Dividend Builder (ADIV US), respectively.
The SmartETFs Dividend Builder ETF invests in approximately 35 dividend-paying companies globally, selecting firms that have provided an inflation-adjusted cash flow return on investment of at least 10% in each of the last ten years.
The SmartETFs Asia Pacific Dividend Builder ETF, meanwhile, is another dividend strategy focused on well-established companies in the Asia Pacific region.
Jim Atkinson, CEO of Guinness Atkinson Asset Management, said: “I’m extremely proud of our team at Guinness Atkinson, as well as our partner advisors, and above all, pleased for our shareholders who we believe will be better served in the current strategies through an ETF vehicle.
“Seeing the strategies now officially trade as ETFs only gives me more confidence that we will continue to be able to offer groundbreaking, innovative solutions to both Guinness Atkinson Asset Management and SmartETFs shareholders in the future.”
The funds’ conversion to ETFs was processed using SEC Rule 6c-11, informally known as the ‘ETF Rule’, which allows ETFs that meet certain requirements under the Investment Company Act of 1940 to come directly to market without obtaining the more lengthy exemptive relief order from the SEC.
The conversion, believed to be the first of its kind in the US asset management industry, signals a new, and more direct method by which ETFs can take market share from mutual funds – ETFs have, for many years, been attracting greater inflows compared to mutual funds due to their liquidity, intraday tradability, lower costs, and tax benefits.
While the two newly created SmartETFs collectively house just $30 million in assets, Dimensional Fund Advisors is gearing up to make a much larger conversion within the next few months. The quant specialist is planning to convert six of its tax-managed mutual funds, which collectively house around $26 billion in assets, into actively managed transparent ETFs.