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Emily Graffeo | Sep 09, 2022
(Bloomberg) — Neuberger Berman is planning to convert its only US commodity mutual fund into an ETF, the latest asset manager hopping on a trend expected to pump $1 trillion into the ETF ecosystem.
The $233 million Neuberger Berman Commodity Strategy Fund (NRBAX) is set to become an active, fully transparent ETF in the fourth quarter of 2022, according to regulatory filings. The switch brings Neuberger Berman’s exchange-traded fund lineup to four, and will instantly boost its assets in the industry. The company’s first ETFs, launched in April, have only managed to gather a combined $16 million in assets so far.
The New York-based firm joins an array of asset managers that have already shifted billions from mutual funds into generally lower-cost, more tax-efficient ETFs. Dimensional Fund Advisors executed one of the first formal conversions in 2021. JPMorgan converted four mutual funds this year, while smaller shops including Guinness Atkinson and Motley Fool have also made the switch.
“Neuberger Berman is clever in cautiously testing ETF ground while protecting their existing mutual fund lineup,” said Henry Jim, a Bloomberg Intelligence ETF analyst. “If the conversion pans out they may consider converting others.”
In the coming decade, more than $1 trillion worth of mutual fund assets could be converted into ETFs, according to an analysis by Bloomberg Intelligence. That would be a huge boost to the $6.5 trillion US ETF market, though it’s only a fraction of the mutual fund world.
Roughly $598 billion has exited mutual funds in 2022 so far, data from the Investment Company Institute show. Meanwhile, ETFs have raked in over $369 billion this year, though the pace has slowed from 2021’s record influx, according to Bloomberg compiled data.
A spokesperson for Neuberger Berman confirmed the plans in emailed comments, adding that the firm intends for the conversion to take place on or around Oct. 14, 2022. The expense ratio of the new fund will be 0.65%, cheaper than fees on the various share classes of the mutual fund.
–With assistance from Katie Greifeld.
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