The Securities and Exchange Commission has allowed dozens of issuers to offer dual share classes of mutual funds and ETFs, signaling an increase in ETF adoption by traditional money managers. The move aims to bring tax efficiency and liquidity benefits to mutual fund structures and potentially to retirement accounts.

Managers who were not previously in the ETF space are now entering it with the approval of share classes, which is expected to be a significant growth driver. The SEC’s notice grants petitions for dual share classes, with a deadline of Jan. 12 for ordering a hearing on any application.

The notice applies to 30 asset managers, including BlackRock, F/m Investments, PIMCO, JPMorgan, Fidelity, Morgan Stanley, and others. Liquidity will be a key factor to monitor, as funds may need to hold more cash or liquid assets, potentially impacting fees and balance sheets. The influx of active managers doing custom in-kind baskets could reshape the ETF marketplace.

Read more at Yahoo Finance: SEC to Open Floodgates for Dual Share Classes