Booth’s DFA Gets Green Light for Tax-Busting Vanguard Design

Core Viewpoint - Dimensional Fund Advisors has received regulatory approval to adopt a dual share class fund structure, previously exclusive to Vanguard, which is expected to save investors billions in taxes [1][2]. Group 1: Regulatory Approval and Fund Structure - Dimensional has been granted exemptive relief to offer dual share class funds, allowing the addition of exchange-traded fund (ETF) share classes to 13 of its US equity funds [2]. - The approval marks a significant moment for the $13 trillion US ETF industry, as many money managers have seen substantial outflows from mutual funds to more tax-efficient ETFs [3]. Group 2: Industry Impact and Future Prospects - The dual share class fund design, created by Vanguard over two decades ago, has now become available to other firms following the expiration of Vanguard's patent in 2023 [4]. - Over 75 other firms are currently seeking permission from the SEC to utilize the dual share class model, indicating a potential wave of future approvals [4]. - Analysts predict that the approval could lead to a surge in new ETFs, potentially altering the tax implications and performance of numerous mutual funds, and may facilitate greater access to ETFs within the American retirement system [6].