(Bloomberg) — BlackRock Inc. is feeding the beast: investors who have more appetite for ETFs than mutual funds.

The world’s largest asset manager has converted mutual fund BlackRock International Dividend into an ETF, after revealing plans in April to change its structure. The $765 million fund has a new name – the BlackRock International Dividend Active ETF – and a new ticker, “BIDD,” to debut Monday on the New York Stock Exchange.

BIDD is actively managed and invests in dividend paying companies in developed and emerging markets. Its five-year average annual return as a mutual fund was 6.9%, roughly in line with a basket of comparable funds compiled by Bloomberg. The new ETF’s expense ratio, 0.61%, is five basis points lower in its new form.

With its first mutual fund-to-ETF conversion, BlackRock joined asset managers like Dimensional Fund Advisors and Fidelity Investments, which have turned their funds into generally cheaper and more tax-efficient wrappers.

Since the first trend reversal in 2021, asset managers have converted more than 70 mutual funds into ETFs, as investors increasingly turn to exchange-traded options.

Rachel Aguirre, head of U.S. iShares products at BlackRock, said BIDD’s shareholder base and holdings were aligned with the ETF’s packaging, and the firm had “seen a shift in preferences of investors demonstrated by flows into active ETFs versus active mutual funds.”

Annual net inflows into U.S. ETFs crossed a new high on Friday, reaching $913 billion this year, more than 2021’s record inflow of $910 billion, according to Bloomberg Intelligence.

BlackRock – which has been the largest ETF issuer for more than two decades – has invested more than $223 billion in its US ETFs this year. It is home to about $3.15 trillion in U.S. ETF assets and about $350 million in mutual fund assets, according to data compiled by Bloomberg. In October, BlackRock filed with the SEC to create exchange-traded fund share classes for its mutual funds, a design that would transfer the tax benefits of the ETF wrapper to its billions in assets. existing mutual funds.

Aguirre said BlackRock plans to do more ETF conversions “when it makes sense for the strategy, the existing shareholder base and when we see customer demand.”

However, she added, mutual funds “continue to play a critical role” for the asset manager, particularly in “retirement channels due to client preferences”.

–With the help of Isabelle Lee.

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