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Harbor Capital Eyes Mutual Fund Conversion into Major ETF Push

(Bloomberg) — Harbor Capital Advisors is all set to join the growing ranks of money managers converting mutual fund assets into ETFs.

With about $63 billion, the firm expects to switch at least one of its products to an exchange-traded fund this year, according to Steve Cook, managing director of ETF Capital Markets at Harbor.

After launching its first ETF in 2021, the Chicago-based company wants as many as 12 by the end of the year, as it plans to make a big push into the $6.9 trillion U.S. industry.

“Market trends dictate what asset managers and investment managers need to move toward the flow,” Cook said in an interview. “It is certainly proven that ETFs, on the money front, have received most of the inflows and continue to gain momentum.”

Investors have been turning away from mutual funds and ETFs for years, especially in the equity market, and the money management industry is following. The trend crystallized last year with the historic first conversion by Los Angeles-based Guinness Atkinson Asset Management in March.

Since then, huge amounts of Dimensional Fund advisors have grown the list of the largest ETF issuers after flipping nearly $29 billion from their mutual funds. Franklin Templeton is making about $250 million worth of asset switches this year, while JPMorgan Asset Management plans to convert about $10 billion.

Read more: David Booth’s Dimensional is already the largest active ETF firm

Although Cook wouldn’t speculate about how many assets might be switched or from which funds, the conversion could be the key to Harbor’s ETF success.

The Harbor Long-Term Growers ETF (ticker WINN) became the firm’s fourth when it launched this month. The growth-focused fund — managed by a team from Sig Segalas’ Jenison Associates, where ETF star Kathy Wood spent nearly two decades — joins the Harbor Disruptive Innovation ETF (INNO), the Harbor Scientific Alpha Income ETF (SIFI) and the Harbor Scientific Alpha Income ETF (SIFI). Harbor Scientific Alpha High-Yield ETF (SIHY). All four made their debut in the last six months.

Collectively they are off to a slow start with a combined net worth of around $73 million. Meanwhile the Harbor Capital Appreciation Fund — with a similar large-cap, growth-focused strategy to WINN — has about $35 billion in assets across its share classes, according to data from Bloomberg.

“We think and expect that Harbor will eventually try to convert some mutual funds into ETFs,” Cook said. “We’re excited about some of the potential this could bring, where it’s right for shareholders.”

–With assistance from Katie Greifeld.

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