By Aaron Neuwirth
On Monday, the Nottingham Company, a leading fund administrator, issuer, and consultant to the mutual fund and ETF industry, announced live trading on NYSE ARCA for its first conversion of an open-end mutual fund to an exchange traded fund (ETF).
Nottingham-affiliated series trust Starboard Investment Trust completed the registration portion of the process recently for the Adaptive Growth Opportunities Fund as it converted to the Adaptive Growth Opportunities ETF (AGOX). Starboard Investment Trust is the first fund administrator-sponsored series trust to convert one of its mutual funds to an ETF.
The Adaptive Growth Opportunities Fund converted all its assets to AGOX on Friday, May 7th, with public trading opening Monday morning, May 10th.
Adaptive Growth Opportunities has been a Morningstar 5-Star rated fund in both the Three- and Five-year categories, as of March 31, 2021. The investment objectives of AGOX will remain identical to Adaptive Growth Opportunities.
The conversion is also a first in converting a mutual fund with multiple classes into an ETF with a single class. “The process required a lot of thought and whiteboarding. We have been told nobody has done this previously,” according to Pete McCabe, Chief Operating Officer for Nottingham. “Our fund accounting team worked with our custodian Clear Street, and the process was completed seamlessly.”
Strong Leadership Handles a Complicated Conversion
“This was a complicated process which we could not have done without the leadership of the Nottingham team,” stated Adaptive Investments CEO, Greg Rutherford. “Kip Meadows brought the idea to me in the Fall of 2020. Based on our many years of working with Nottingham, we knew they could get it done, even though we knew it was treading new territory. We are excited to be among the first mutual funds to convert to an ETF, responding to what our wealth managers are telling us they want for their clients.”
The Adaptive Growth Opportunities mutual fund is only the second mutual fund to convert to an ETF, and the only conversion thus far led by a fund administrator and consultant. “We are somewhat unique in that we can propose an entrepreneurial business idea and act upon it,” stated Kip Meadows, Founder and CEO of Nottingham. “Banks and firms owned by private equity are reluctant to undertake new ventures, and several of our ETF issuer competitors do not come from a fund organization, fund administration background. We have been setting up mutual funds for three decades and ETFs for five years, so we have a good idea of what team to put together for a project like this.”
Katherine Honey, President of Nottingham, added: “We have such good partners in the industry, both the legal and accounting firms we work with and the strong relationships we have built with NYSE Arca, Clear Street, and many Lead Market Makers and APs. We really could not have pulled this off without strong team efforts both within our team at Nottingham and by our industry partners. We are very excited and looking forward to the next conversions we already have in registration.”
For more information, visit www.adaptivefds.com.