ETFs are a different ball game. Because ETFs are so popular, there's a chance that attractive closed-end funds could see their assets rise on conversion to ETF status. For instance, it is relatively easy to imagine investors embracing the First Trust Value Line Fund if it converts to ETF status. PowerShares already offers a Value Line ETF, which has attracted nearly $200 million in assets in just a few months on the market; in fact, they've filed to launch two additional Value Line funds as well.
First Trust has been aggressively expanding into the ETF space over the past year, and already offers eight ETFs. It's easy to imagine management pushing for more conversions of their closed-end funds as an easy way to increase their footprint in the rapidly expanding ETF space.
First Trust isn't the only closed-end fund shop expanding its ETF presence. Claymore Advisors - a group with a long history in closed-end funds - has filed to launch a number of ETFs, and made overtures about converting those funds to ETF status in recent months.
PowerShares, for its part, has filed a patent on a process to allow a closed-end fund to automatically convert to an ETF following shareholder approval.