Mutual funds are bleeding assets anew, just as their ETF cousins break fresh records. Now, firms from Lazard to Aberdeen Group Plc. are pushing to convert traditional funds into exchange-traded ones, even as regulators look poised to bless a structure that would allow both to coexist in peace.
The number of mutual funds being converted into ETFs in 2025 has already topped 30, the most since 2021, barring last year when one large swathe of funds issued by a single firm were flipped, according to figures compiled by Bloomberg Intelligence. Data from State Street and Morningstar show a similar trend as well.
It comes even as the asset-management industry awaits a groundbreaking regulatory change that would allow firms to add an exchange-traded fund share class onto their existing mutual funds, arguably negating the need to go all-in on just one wrapper. In the meantime, money managers have forged forward with their conversion plans.
In 2024, mutual funds bled a net $451 billion, while their exchange-traded counterparts — which typically offer superior tax efficiency and liquidity — took in a record $1.1 trillion, according to data from Bloomberg Intelligence. So far in 2025, mutual funds have already lost $432 billion.
