SEC Advances Multi-Class ETF Share Framework

The SEC has advanced a framework permitting a single mutual fund to issue ETF share classes alongside traditional mutual‑fund shares, letting one pool of assets offer shares that trade intraday (ETFs) and shares that redeem once daily at NAV. The approach includes required board oversight, conflict monitoring and investor disclosures to protect fiduciary duties. Dimensional Fund Advisors has filed Form 8.3 notices and a Rule 8.5 public dealing disclosure that disclaim beneficial ownership of the reported positions, disclose specific holdings (including filings showing positions of 19,115 and 4,086 shares), and state that Dimensional LP and/or affiliates may not have voting discretion over certain blocks. Market commentators say the change — helped by the expiry of Vanguard’s patent on the structure — should prompt new product structures and broader ETF adoption, with roughly 80 firms expected to pursue similar offerings. Industry participants warn implementation will be operationally complex, requiring manual processes and posing potential distributor resistance over revenue impacts.