Nuveen Investments, which has been away from the exchange traded funds business for 15 years, took another step toward returning when shareholders of one of the firm’s commodity mutual funds approved the conversion of that fund into an ETF.
After the close of U.S. markets Tuesday, Nuveen said in a statement “shareholders of the Nuveen Diversified Commodity Fund (CFD), have approved the plan to convert the fund into an open-ended exchange-traded fund (ETF). The conversion plan is also contingent on customary regulatory approvals.”
Converting CFD to an ETF now requires regulatory and the fund could become an ETF by the fourth quarter. In May, Nuveen said shareholders of the Nuveen Long/Short Commodity Total Return Fund (NYSEArca: CTF), have approved the plan to convert the fund into open-ended exchange-traded fund (ETF). The conversion plan is also contingent on customary regulatory approvals, according to a statement.
Nuveen said in December it was planning to convert CTF and CFD into ETFs. CFD invests in an array of commodity futures and forward contracts. As of the end of November, the mutual fund allocated a combined 26.5% of its weight to oil and gold, according to issuer data. The fund’s annual expenses total 1.75%.
CTF holds a “portfolio of exchange-traded commodity futures contracts that are among the most actively traded futures contracts in global commodity markets,” according to Nuveen. CTF charges 1.61% per year. [Nuveen to Convert two Mutual Funds Into ETFs]
Last month, the SEC said it is likely to approve plans by Nuveen for some actively managed ETFs. An order granting the application will be issued unless the Commission orders a hearing, according to the SEC.
Nuveen “first asked for permission to offer index-based ETFs in 2000, at the time developing proposals for what could have been the very first bond ETFs. Those products now enjoy tremendous popularity — ETFs are a $3 trillion market globally,” reports Trevor Hunnicutt for InvestmentNews, which broke the story on the SEC potentially clearing the way of Nuveen’s ETF return.
“CFD is not currently, and after the conversion will not be, a mutual fund or any other type of investment company within the meaning of the Investment Company Act of 1940,” according to the statement.
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