Global X, Mirae Convert Pair of Mutual Funds to ETFs
The asset manager’s parent joins trend of converting funds into easier-to-trade ETF model.
Global X Management Co., which manages $35.5 billion in 105 exchange-traded funds, and its parent company are the latest asset managers to convert mutual funds to the growing, and easier-to-trade, ETF model.
Global X has taken on the Global X Emerging Markets ETF (EMM) and the Global X Emerging Markets Great Consumer ETF (EMC), as of May 15. Both actively managed funds had been advised by parent company, South Korea-based Mirae Asset Global Investments.
Billions of dollars in mutual fund assets have been transferred to ETFs to take advantage of the latter’s tax benefits and ease of trading. Around 40 mutual funds have been converted to ETFs since the first switch in March 2021, according to etf.com data. About $40 billion in assets switched in 2021 and 2022, and another $60 billion to $80 billion may convert this year, CFRA’s Head of ETF Data & Analytics Aniket Ullal told etf.com earlier this year.
Global X’s EMM invests in any company whose stock is issued in emerging markets or that is “tied economically to emerging markets.” EMC focuses on companies that its managers think will “be beneficiaries of the increasing consumption and growing purchasing power of individuals in the world’s emerging markets.”
“Given the company’s expertise in both emerging markets and in ETFs, it made sense to bring the two together,” Malcolm Dorson, senior portfolio analyst at Global X, told etf.com in emailed comments. Investors will benefit from the liquidity, tax efficiency and lower fees of ETFs, “while benefitting from significant ETF expertise from Global X,” he added.
Emerging markets have been having a tough decade or so, having substantially underperformed U.S. markets with the largest emerging markets ETF, the Vanguard FTSE Emerging Markets ETF (VWO).
Dorson acknowledges the underperformance and says he believes that will change on expectations for a weaker dollar and slowdown of U.S. gross domestic product growth.
“EM equities have historically moved up roughly 3.5% to 4% for every 1% move of U.S. dollar weakness,” he said. Secondly, he thinks emerging market GDP growth will pick up after the delayed reopening of China after the COVID-19 pandemic.
Contact Gabe Alpert at [email protected]
