Mon. Oct 18th, 2021


Motley Fool’s asset management partner plans to jump on the bandwagon of mutual fund-to-ETF conversions as part of a refurbishment of its business.

Motley Fool Asset Management, formerly known by its acronym MFAM, aims to turn its actively managed $ 704 million MFAM Global Opportunities and $ 331 million MFAM Mid-Cap Growth funds into ETFs by the end of the year. The manager already has two index ETFs, the $ 526 million Motley Fool 100 Index ETF and the $ 186 million MFAM Small-Cap Growth ETF.

The brand allows the group to use its history with Motley Fool, which is known for its website that provides equities and financial advice to individual investors, say company executives. The Website and Asset Manager are separate entities under the Motley Fool Umbrella.

By shifting the focus to ETFs, the company can benefit from the clearer brand, which is known to make investing easier for individuals, says Kelsey Mowrey, president of Motley Fool Asset Management. However, the funds will keep the MFAM brand in their name even after they have been converted into ETFs.

This article was previously published by Ignite, a title owned by the FT group.

“The timing [of the ETF conversions] just feels perfect, ”Mowrey said. “It goes back to the principles and beliefs of our parent: accessibility.”

In general, investors tend to prefer ETFs for their user-friendly benefits, such as transparency, tax efficiency and low fees, she added. The group intends to carry out more ETFs along the way, she noted.

Motley Fool is the latest in a series of mutual fund managers announcing plans to turn products into ETFs. Dimensional Fund Advisors, Guinness Atkinson and the Cannabis Fund have already completed conversions, while JPMorgan Asset Management plans to switch to various funds.

The company has been researching ETF conversions since the launch of the Fool 100 Index ETF in January 2018, Mowrey said. “We wanted to focus on doing it right rather than being the first,” she said.

Global Opportunities’ return of 20.7 percent for three years outperformed the median fund in the Morningstar Global Growth Equities category by 1.4 percentage points, placing it in the top third of its peer group. This year through Friday, the fund returned 15.5 percent, surpassing the median of the peer by 1.7 percentage points and placing it in the top 40 percent of peers.

However, Mid-Cap Growth’s performance was not noticeable. The fund returned 15 percent over the three-year period ending Friday and returned 10.2 percent year-to-date, placing the fund in the bottom 15 percent of its Morningstar category. The fund declined its peer median by 5.1 percentage points and by 4.6 percentage points year-to-date over three years.

* Ignites is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from the introduction of new products to regulations and trends in the industry. Trials and subscriptions are available at ignites.com.

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