The SEC approved dual share classes of ETFs and mutual funds, a game-changer for financial advisors. Dimensional Fund Advisors received the exemption, leading the way for major asset managers. The decision may reshape how advisors use funds in client portfolios, blending ETF advantages with traditional mutual funds. Dimensional plans to offer an actively managed ETF share class.

Advisors anticipate blending ETF and mutual fund advantages with dual share classes, potentially entering the 401(k) landscape. Dimensional, a major active ETF issuer, can extend key ETF features to existing mutual funds, boosting tax efficiencies. The firm applied to add ETF share classes to 13 US equity funds, including flagship strategies. Dimensional has 41 ETFs with over $225 billion in assets under management.

The approval of dual share classes brings challenges for managers, including back-office reporting and investor understanding. Dimensional transitioned the least operationally complex funds first. Observers expect other asset managers to follow suit, but winners and losers are expected. Strong brand names may benefit most, with boutique managers possibly gaining from strong track records.

The SEC’s approval of dual share classes of ETFs and mutual funds is a significant milestone for the industry. Dimensional Fund Advisors is leading the way, with major asset managers waiting for approval. The decision could reshape how financial advisors use funds, blending ETF advantages with traditional mutual funds.

Read more at Yahoo Finance: What Dimensional’s Dual-Share-Class Approval Means for Advisors