Count Thrivent among the fund issuers participating in the mutual fund-to-ETF conversion wave. Thanks to that process, the asset manager’s ETF lineup grew to five from three on Monday.
Long known as one of the leaders in responsible, values-based investing, Minneapolis-based Thrivent converted the Thrivent Mid Cap Value ETF (TMVE) and the Thrivent Small Cap Value ETF (TSCV) from the mutual fund wrapper, marking the third and fourth exchange funds the issuer has brought to market this year. The Thrivent Small-Mid Cap Equity ETF (TMSE), its first ETF, debuted in 2022.
Mutual fund-to-ETF conversions are contributing mightily to the population growth in the actively managed ETF space. For advisors and clients, there are positives in these moves, including ETFs’ status as superior to mutual funds when it comes to fees, intraday tradability and tax efficiencies. Thrivent is capitalizing on those traits.
"The ETF market is experiencing rapid growth and significant client interest, and today's conversions underscore Thrivent's work to give clients more flexibility and choice to help them achieve their financial goals," said Thrivent Mutual Funds President Mike Kremenak in a statement. "Thrivent has years of expertise in small- and mid-cap strategies and active management that we'll bring to these new ETFs—giving investors another way to diversify and build strong portfolios."
Some Things Are Staying the Same
For advisors and investors that became familiar with the mutual fund editions of the aforementioned ETFs, some of the goods is that Thrivent isn’t making management-level alterations with the newly converted ETFs. That’s a playbook deployed by other issuers when moving mutual funds to the ETF wrapper and it’s a smart one because end users like consistency.
Nicholas Griffith and Graham Wong will stay on as managers of the Thrivent Mid Cap Value ETF will Charmaine Chan and Christopher Parker will lead the Thrivent Small Cap Value ETF. The mid-cap ETF has some history as it debuted in mutual fund form in 2020.
“Our goal is to pick the best 60 to 80 companies in our universe, and we like to put 40% of our assets into our top 20 ideas,” said Griffith. “Simplistically, we're looking for top decile opportunities while simultaneously avoiding the highest risk and the lowest quality companies, which oftentimes don't do very well.”
The Thrivent Small Cap Value ETF has a multi-year track record as well as it debuted as a mutual fund more than three-and-a-half years ago. It’s definitely a departure from traditional, pure beta, passive small-cap strategies and that could be a plus for clients.
“When we think about TSCV versus the category of small-cap investment strategies, a few things stand out. We're more concentrated than many actively managed funds. We focus on having 50 to 65 positions at any given time,” notes Chan. “Compared to other actively managed funds, which on average has 217 positions and on median 98. When compared to small-cap value indexes, we can focus on investments that offer the most attractive risk reward opportunities. We believe this concentration allows us to focus on investing in what we believe to be the most compelling opportunities.”
Thrivent Could Be MF-to-ETF Leader
It remains to be seen, but Thrivent could establish itself as one of the mutual fund-to-ETF conversion leaders. With Monday’s conversions, the firm has 21 mutual funds remaining in its stable, some of which could gain traction in the ETF wrapper.
“Thrivent's continued expansion into ETFs aligns with industry trends and the company's long-term investment philosophy and active management approach. The new ETFs are designed to serve as core building blocks in client portfolios, supported by the expertise of Thrivent's portfolio management team,” said the asset manager in the press release.
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