Converting a Mutual Fund to an ETF: Key Regulatory and Operational Considerations

Direct Conversion vs. Reorganization, Shareholder Consents, SEC Exemptive Orders

A live 90-minute premium CLE video webinar with interactive Q&A

Tuesday, July 13, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, June 18, 2021

or call 1-800-926-7926

This CLE webinar will discuss the process for converting from a mutual fund to an exchange-traded fund (ETF) and key regulatory and operational issues asset managers and their counsel must consider.


The recently recognized ability to convert mutual funds into ETFs could greatly facilitate an asset manager's goal to enter the ETF business. Asset managers now have the ability to enter the ETF business with scale in terms of assets under management, but certain issues need to be resolved before a mutual fund to ETF conversion can be completed.

The asset manager must first determine the type of conversion: a direct conversion or a shell reorganization. The mutual fund's governing documents and the applicable state statutory requirements should be reviewed and analyzed to determine whether the mutual fund's shareholders need to approve a conversion or reorganization at a shareholder meeting.

Whether it intends to directly convert the mutual fund into an ETF or reorganize the fund into an ETF series, the asset manager must amend the fund's registration statement 75 days in advance of the contemplated action and prepare to respond to SEC comments. The asset manager will have to decide whether it will take advantage of the new non-transparent, actively managed ETF exemptive orders, and, if so, license the technology that shields the ETF's portfolio.

Now that Rule 6c-11, the so-called "ETF Rule," is effective, an asset manager can effect the conversion in quick order. Counsel working with the asset manager should examine and modify, as necessary, the mutual fund's investment portfolio and the strategy to manage the portfolio to ensure that they are suitable for the ETF product. In doing so, sensitivity should be given to whether changes can be kept to a minimum so as to avoid an expensive shareholder vote. Finally, the mutual fund's board of directors must approve the conversion of the mutual fund into an ETF.

Listen as our authoritative panel discusses the challenges and nuances of converting a mutual fund to an ETF.



  1. Mutual fund/ETF conversion--recent developments
  2. Creating a timetable
  3. Establishing brokerage accounts for shareholders
  4. Conversion types
    1. Direct conversion
    2. Shell reorganization
  5. Shareholder approval--determining if required
  6. Amending the fund registration statement--additional filings
  7. Modifying fund investment strategy, if necessary
  8. Eliminating classes of shares and deactivating Rule 12b-1
  9. Licensing necessary technology for non-transparent, actively managed ETF capability


The panel will review these and other key issues:

  • What provisions of a mutual fund's governing documents should counsel review before contemplating a conversion?
  • When is a direct conversion preferable to a shell reorganization, and vice versa?
  • What additional actions and disclosures are required for an actively managed ETF?
  • Does the active manager have the capital markets skills to manage a listed ETF or should that function be outsourced


Strench, Bibb
Bibb Strench

Thompson Hine

Mr. Strench focuses on exchange-traded funds (ETFs), exchange-traded products (ETPs), closed-end funds, mutual funds...  |  Read More

Sullivan, Ryan
Ryan Sullivan

Senior Vice President
Brown Brothers Harriman & Co.

Mr. Sullivan is a Senior Vice President and head of BBH’s U.S. Exchange-Traded Fund Services. In this role, he...  |  Read More

Attend on July 13

Early Discount (through 06/18/21)

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Early Discount (through 06/18/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include program handouts.

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