Following GDIV Success, Harbor Expects More Mutual Fund Conversions

Harbor Capital Advisors is expected to expand its ETF lineup through mutual fund conversions in 2023, building upon the success of the Harbor Dividend Growth Leaders ETF (GDIV).

GDIV was added to Harbor’s ETF lineup in May 2022 through the conversion of an existing mutual fund that carried a nine-year track record and nearly $150 million in assets under management.

“GDIV is being run the exact same way it was as a mutual fund but is more tax efficient,” Steve Cook, head of ETFs at Harbor, told VettaFi. “In 2022 we were able to sell out of three names without incurring any additional capital gains.”

Asset managers are increasingly looking to mutual fund to ETF conversions as a solution to offer investors the same strategy but with lower fees and a more tax-efficient vehicle.

Cook said there will be more mutual fund to ETF conversions in 2023 in the industry, and Harbor is likely to be a participant. “We plan to expand our ETF lineup leveraging our best ideas,” he added.

“Asset managers converting mutual funds with strong long-term records into ETFs is likely to persist,” Todd Rosenbluth, head of research at VettaFi, said. “It brings firms deeper into the ETF market with scale benefits and showcases their security selection abilities.”

GDIV is an active ETF sub-advised by Westfield Capital, the same portfolio management team behind the predecessor Westfield Capital Dividend Growth Fund.

GDIV offers access to companies that Harbor believes have the potential for increasing dividend payments as reinvested dividends have historically driven a significant portion of stock market returns. Through its investment process, GDIV also seeks to deliver upside market participation with limited downside risk for investors.

GDIV migrated to the NYSE from NYSE Arca on January 2, alongside the Harbor All-Weather Inflation Focus ETF (HGER) and the Harbor Long-Term Growers ETF (WINN).

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