RiverNorth Transitions From Mutual Fund To High-Yield ETF CEFZ

In a development highlighting the current trend of mutual fund-to-ETF conversions, RiverNorth Capital Management and TrueShares announced the launch of the RiverNorth Active Income ETF (NYSE:CEFZ). The launch represents the conversion of the long-standing, nearly 20-year-old RiverNorth Core Opportunity Fund to a fully independent, actively managed ETF.

CEFZ ETF has just hit the market. Check its live prices.

The DNA of the fund is still largely intact, CEFZ will still be chasing the same opportunistic strategy of investing in closed-end funds (CEFs) and ETFs, mixing equity and fixed income exposure. The objective? Achieving a healthy 10% run rate on annual distributions while maintaining an emphasis on income generation and long-term capital appreciation.

RiverNorth CEO and CIO Patrick Galley underscored the change as part of a wider initiative to “improve the investor experience,” citing the advantages of enhanced transparency, liquidity, and tax efficiency afforded by the ETF wrapper. TrueShares, a company within TrueMark Investments, will be the advisor, while RiverNorth will retain its position as sub-advisor and strategy manager.

A Broader Trend: Mutual Fund Conversions Gather Steam

CEFZ is one of a growing number of mutual funds that have transitioned into the ETF universe, a trend gaining momentum as asset managers strive to remain competitive in a fee-sensitive, transparency-focused business environment.

Among the newer converts are:

Eaton Vance, the ETF arm of Morgan Stanley, added to its lineup of actively managed fixed income offerings on Monday with the introduction of the Eaton Vance Mortgage Opportunities ETF (NYSE:EVMO). The fund is a repositioning of the Morgan Stanley Mortgage Securities Trust, a mutual fund since July 1997.

Another example is the launch of the Lazard International Dynamic Equity Fund (NYSE:IEQ) in May, which was a conversion of Lazard Asset Management’s International Equity Advantage mutual fund.

Why It Matters

These conversions represent a structural change in the delivery of investment products. ETFs provide investors with lower expenses, real-time pricing, and a tax-efficient structure, benefits that have made them the vehicle of choice for both retail and institutional investors.

As more legacy fund managers get on the bandwagon, the ETF space is evolving. The formerly impenetrable barriers between active mutual funds and passive ETFs are disintegrating rapidly, clearing the way for hybrid models such as CEFZ that combine active alpha with the structural advantages of ETFs.

Read next:

• Trump Drops 100% Tariff Shocker On Semiconductors: These ETFs Are Dodging It

Photo: Shutterstock