ACA Publishes Article on Considerations for Mutual Fund to ETF Conversions

A recent ACA article highlights the due diligence required when considering a mutual fund to ETF conversion. ACA’s approach details three pillars that need to be examined and understood before converting, this includes:

• Strategic Analysis: Examining whether the ETF wrapper makes sense for the strategy as well as understanding the creation/redemption mechanism and requirements of onboarding.
• Governance: Ensure that governing documents are reviewed and that the board is fully informed throughout the entire process.
• Compliance and Operational Considerations: Understand the regulatory framework in the ETF space including brokerage account requirements for shareholders, fractional shares, and intermediary relationships.

The framework provides additional considerations such as setting expectations for the conversion project, early and ongoing communication, and understanding market flows, among others.

Click here to read the ACA article “Mutual Fund to ETF Conversions.”