Is The Industry Ready For An ETF Share Class?

Introduction

On 29 September 2025, the US Securities and Exchange Commission (SEC) issued notice¹ of an exemptive application² filed by Dimensional Fund Advisors LP, et al. (Dimensional) seeking relief (Relief) to offer index-based or actively managed funds that have one or more mutual fund share classes and an exchange-traded fund (ETF) share class (Dual Class Funds). Under the Relief contemplated, an existing mutual fund could add an ETF share class or an existing ETF could add mutual fund share classes; and in each case, mutual fund class holders may exchange their shares for ETF class shares on a tax-free basis (Exchange Privilege). To protect the arbitrage mechanism underlying the ETF class shares, a Dual Class Fund's mutual fund shares must not be listed on any securities exchange, and a Dual Class Fund "will not permit or facilitate, a secondary market for, peer-to-peer trading of, or quotation on any quotation medium" of, its shares (other than as described