TCW Files to Convert 2 Mutual Funds Into ETFs

One fund focuses on artificial intelligence, the other on innovations in technology.

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Finance Reporter
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Reviewed by: Mark Nacinovich
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Edited by: Lou Carlozo

TCW Group, a Los Angeles-based asset manager that acquired Engine No. 1's ETF platform this past summer, filed to convert two of its mutual funds into exchange-traded funds this week as demand for easier-to-trade ETFs surpasses that of its larger, more-established relative.

The firm applied to convert the TCW Artificial Intelligence Equity Fund into the TCW Artificial Intelligence ETF, according to the fund’s prospectus filed with the Securities and Exchange Commission on Tuesday. The fund’s portfolio will invest in companies that benefit from expanding AI technology, including “companies that are using AI to transform their businesses, enabling others to do so, or providing technologies on which AI systems are built,” according to the fund’s prospectus.  

TCW also announced a “proposed reorganization” of its TCW New America Premier Equities Fund into the “TCW Compounders ETF,” according to the SEC filing. The ETF would be actively managed and invest in companies that “will benefit from transformation as a result of technological innovations, market dynamics, and/or changes in client preferences,” according to the fund’s prospectus. 

The two filings signal the first new ETFs from TCW it acquired Engine No. 1's ETF platform, which included three ETFs with about $641 million under management. TCW has about $200 billion in assets under management.  

ETF Conversions 

As ETFs continue to grab market share from mutual funds because of their liquidity and low fees, legacy mutual fund providers are seeking ways to get a foothold into the competitive and often cutthroat ETF industry. Conversions into ETFs represent one of the most popular ways for mutual fund providers to give investors the sought-after ETF format in strategies they know and have used.  

About $60 billion in assets have been converted from mutual funds to ETFs since the first mutual fund conversion in 2021 through July of this year.  

AI Craze  

Artificial intelligence stocks have dominated headlines this year as Nvidia Corp. and Microsoft Corp. ranked among the companies that saw huge gains from the technology’s rise to prominence. Yet it remains unclear whether the top tech stocks that soared in 2023 will continue to dominate into the new year, or whether AI hype has already been priced in.  

Issuers hope they have further to run. New York-based Alger also filed this week for the Alger Artificial Intelligence ETF.  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.