Van Eck Global has filed for permission from the SEC to create exchange-traded fund share classes of at least one of its five mutual funds.
According to the filing, both the ETF shares and the mutual fund share classes will represent interests in the same portfolio of investments, according to the filing. Van Eck also wants to be able to issue more classes of conventional mutual fund shares. The firm's mutual funds include the CM Commodity Index Fund, the Emerging Markets Fund, and the Global Hard Assets Fund. The other funds are the International Investors Gold Fund and the Multi-Manager Alternatives Fund.
Van Eck plans to allow all current and future mutual fund shareholders, if they wish, to convert their assets into ETF shares of equivalent value. The conversion privilege will be one way though: only holders of mutual fund shares will be able to convert to ETFs. ETF shares will not be able to make the conversion to mutual funds.
Through its Market Vectors line, Van Eck markets itself as the fifth largest provider of ETFs, with over 40 funds managing roughly $23.7 billion in assets.
By seeking to issue ETF shares of its existing mutual funds, Van Eck is seeking to mimic a strategy of Vanguard, which the filing itself cites in the federal ruling In the Matter of Vanguard Index Funds, et. al, File No. 812-12094, Investment Company Act Release No. 24680 (Oct. 6, 2000) (notice) and 24789 (Dec. 12, 2000) (order).
Vanguard, thanks to approval from that cited ruling, was an early pioneer in developing ETF share classes off of existing mutual funds. Vanguard, in fact, patented the process of creating ETF share classes and currently offers over 60 such classes of existing mutual funds.
Van Eck did not respond to requests for comment as of press time.
Tommy Fernandez writes for Money Management Executive.