Harbor Capital Advisors Inc. closed on the conversion of a $148 million mutual fund on Monday, marking the eighth mutual-fund-to-ETF conversion this year.
The Harbor Dividend Growth Leaders ETF (GDIV) debuted on the NYSE Arca Monday with an expense ratio of 0.50%. That price is less than half the 1.05% fee it charged on institutional-class mutual fund shares.
The actively managed fund targets large cap stocks with a history of consistent dividend increases and returning funds to shareholders. It can invest in foreign companies, but primarily targets U.S. equities.
GDIV was launched in July 2013 as the Westfield Dividend Growth Fund by Westfield Capital Management LP, a $15.9 billion asset management firm in Boston. Westfield will continue to manage the fund as a subadvisor.
Harbor Managing Director Steve Cook said the acquisition is part of Harbor’s plans to bring strategies under its own trust from managers that the firm already has relationships with. The firm is targeting strategies it believes would be more popular with the help of a larger distribution platform and scaled-down pricing.
“Because we believe we can grow [GDIV], it made sense to reduce the expense ratio and make it really attractive and competitive in the market,” he said.
The fund posted a gross return of 26.09% in 2021 compared to the S&P 500’s 28.71% and the Nasdaq Dividend Achievers Select Total Return Index’s 23.52%. It has posted a five-year return of 17.96% during the tech bull market, beating the Nasdaq dividend index’s 17.31% during that period but trailing the S&P 500’s 18.47% return.
Approximately $2.25 billion in mutual fund assets have been converted so far in 2022. Conversions from J.P. Morgan Asset Management Inc. and Dimensional Fund Advisors LP provided most of that figure.
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