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KKM Financial has transformed its Essential 40 mutual fund into an ETF, aligning with the industry trend towards more tax-efficient investment vehicles. ETFs offer investors and financial advisors with taxable accounts the flexibility to manage capital gains and losses, unlike mutual funds that can trigger unexpected tax liabilities.
Many asset managers have been converting their mutual funds to ETFs due to the advantages of tax efficiency and regulatory changes that facilitate the operation of active Investment strategies within an ETF. The number of active equity mutual funds has declined significantly in recent years as a result of this shift.
The newly converted KKM fund, trading under the ticker ESN on the Nasdaq, aims to provide investors with a diversified portfolio of essential companies in an equal-weighted fund structure. Holdings in the fund include JPMorgan Chase, Amazon, Waste Management, and Eli Lilly.
The old mutual fund version of the Essential 40 had a three-star rating from Morningstar, with strong performance in 2022 outperforming the category average. Equal-weighted funds have proven to be resilient during market downturns, attracting investor interest this year.
In 2024, the KKM fund showed a year-to-date performance of approximately 16% before its conversion, with assets totaling about $70 million. The ETF will maintain a net expense ratio of 0.70%, consistent with the previous mutual fund.
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Emily Jensen, graduated from the London School of Economics and Political Science (LSE) in the UK in 2015 with a degree in Economics. She specializes in financial markets and international trade. After graduating, she worked as an analyst at an investment bank in London, where she developed expertise in global economic trends. She later transitioned into consulting, focusing on fintech ventures and providing insights into global economic developments. Emily is passionate about the intersection of finance and technology and aims to drive innovation in the financial sector.
