Mutual Fund-to-ETF Conversions Top 200, Shift $260B

Two hundred three mutual fund-to-ETF conversions occurred over the past five years, including a record 60 in 2025, and those conversions moved more than $260 billion of assets into ETF wrappers, industry data show. Of the converted vehicles, 29 were later liquidated, leaving 174 ETFs that began as mutual funds.

Dimensional initiated the largest wave of conversions in 2021. Other firms followed in subsequent years. Hartford Funds secured board approval for multiple flagship fund conversions set for late 2026.

Major asset managers have converted large active and index mutual funds into ETFs. JPMorgan repackaged multi‑billion-dollar active and core fixed‑income pools into ETF structures. Fidelity reorganized its Systematic U.S. Municipal Bond Index Fund into the ETF FMUN in early 2025. Goldman Sachs converted four active mutual funds representing about $1.5 billion in assets. Baron Capital converted the Baron Technology and Baron FinTech mutual funds into the active ETFs BCTK and BCFN.

By the end of 2025, ETFs accounted for 36% of combined long‑term fund assets. U.S. ETF assets exceeded $13 trillion after a 31% increase in 2025. Over the same period, long‑term mutual fund assets rose about 5%, driven mainly by market appreciation, while active mutual funds recorded more than $600 billion in outflows in 2025.

Net flow figures underline the scale of the shift. The first quarter of 2026 saw more than $500 billion flow into ETFs, a 17% increase compared with the prior year’s first quarter. From 2022 through early 2026, ETFs gathered roughly $5.5 trillion in cumulative net inflows while long‑term mutual funds posted about $1.3 trillion in net outflows, a combined swing near $7 trillion.

Fixed income has been a major focus of conversions and flows. During a tariff‑driven selloff known as Liberation Day, investors withdrew approximately $60 billion from fixed‑income mutual funds in a single month while bond ETFs received about $10 billion. Financial advisers have favored vehicles that can be traded intraday and repriced in real time rather than funds priced only at end‑of‑day net asset value.

Regulatory and structural changes have enabled more conversions and alternative approaches. A dual share‑class structure that allows an ETF share class to coexist with an existing mutual fund portfolio became more broadly available after a patent lapse in 2023. In December 2025, the Securities and Exchange Commission expanded access to multi‑class ETF exemptive relief, permitting managers to add ETF share classes to existing funds without creating immediate taxable events for current shareholders. Dimensional launched the first actively managed share‑class ETF under that framework, and additional products are expected in the second half of 2026.

Large institutional investors continue to use mutual funds and separate accounts for certain needs. Tax‑exempt institutions such as pension plans, endowments, foundations and sovereign wealth funds often require liability matching, customized mandates, specialized credit exposures and unique liquidity arrangements that mutual funds or separate accounts can provide.

Conversion activity has altered product lineups and distribution channels, transferring substantial assets into exchange‑traded structures while a subset of mutual funds and separate accounts remains focused on institutional and customized mandates.