Investors continue to flock to exchange-traded funds, thanks to their tax efficiency, lower cost, daily transparency, and intraday trading capabilities. Since Guinness Atkinson made headlines with the first mutual fund-to-ETF conversion in 2021, major asset managers like Dimensional Funds and JPMorgan have become big adopters.
MFS Investment Management, known for launching the first open-ended mutual fund, recently launched five new active ETFs, marking its entry into the ETF market.
In this article, we’ll take a brief look at the mutual fund conversion trend and MFS’s decision to launch new active ETFs instead — and why you might consider them.
Conversions Dominate Active ETFs
Nearly 80% of all new product launches in Q3 2024 and the full year have been actively managed ETFs, highlighting just how popular they’ve become. On the heels of these trends, at least 120 mutual funds have made the switch to an ETF structure, bringing about $100 billion in assets under management along with them.
Dimensional Funds was among the first major asset managers to make the move in 2022 with the conversion of several funds, including the Dimensional US Core Equity 2 ETF (DFAC), Dimensional US equity Market ETF (DFUS) and Dimensional US Small Cap ETF (DFAS), which has over $56 billion in assets under management today.
In addition, JPMorgan converted some of its most popular mutual funds over the past few years, including the JPMorgan Equity Focus ETF (JPEF), JPMorgan International Research Enhanced Equity ETF (JIRE) and others. The company plans to convert at least three more funds in February 2025, including mortgage-backed security (MBS), data science, and international equity fund.
MFS Launches New Active ETFs
MFS Investment Management, known for launching the first open-ended mutual funds a century ago, recently became the latest holdout to launch new active ETFs. But rather than converting existing mutual funds, the company launched a series of new active ETFs targeting popular themes among ETF audiences.
New Active ETFs From MFS
The recently launched active ETFs from MFS are sorted by their AUM, which ranges from $25M to $29M. They have expenses between 0.34% and 0.59%. Having launched earlier this month, these funds do not have any information about returns or dividends.
| Name | Ticker | Type | Actively Managed? | AUM | Expense |
|---|---|---|---|---|---|
| MFS Active Growth ETF | MFSG | ETF | Yes | $29M | 0.49% |
| MFS Active Core Plus Bond ETF | MFSB | ETF | Yes | $28.7M | 0.34% |
| MFS Active International ETF | MFSI | ETF | Yes | $27.6M | 0.59% |
| MFS Active Intermediate Muni Bond ETF | MFSM | ETF | Yes | $26.8M | 0.34% |
| MFS Active Value ETF | MFSV | ETF | Yes | $25M | 0.44% |
The move is sure to make these funds slower growing than Dimensional or JPMorgan funds that brought along tens of billions of dollars in assets. But, at the same time, the company could avoid cannibalizing its mutual fund portfolio by keeping them separate. And investors have a greater choice between the two investment vehicles.
Despite being entirely new funds, their strategies mirror those of the company’s conventional mutual fund portfolios. Consequently, investors have access to more than a century of insights into popular market subsets, including value, growth, international, core plus, and intermediate bond portfolios — along with more transparency and lower fees.
The Bottom Line
MSF’s entry into the ETF market represents a strategic approach that differs from some of its peers like Dimensional and JPMorgan. Rather than converting existing mutual funds, the company launched new active ETFs that mirror many of their successful strategies while employing the more efficient and inexpensive ETF structure.
Investors interested in building a portfolio that leverages the expertise of a century-old mutual fund company may want to consider these new funds for their portfolio.
