You can find original article here WealthManagement. Subscribe to our free daily WealthManagement newsletters. (Bloomberg) -- Quant firm Dimensional Fund Advisors has received formal approval to adopt a fund structure that for two decades has been used exclusively by Vanguard Group to save investors billions of dollars in taxes. Dimensional, founded by David Booth, said on Monday that regulators had granted it so-called exemptive relief to offer dual share class funds. Dimensional had applied to add exch ...

Core Insights - The SEC is set to grant exemptive relief to Dimensional Fund Advisors for offering dual share class funds, a move that has been anticipated for two years [2] - Vanguard was previously the only asset manager allowed to offer dual share class funds, but with its patent expiring in 2023, other managers are now looking to adopt this structure [3] Group 1: SEC's Decision and Market Implications - The SEC's decision may lead to a wave of applications from other asset managers, who are encouraged to update their applications to resemble Dimensional's to expedite the approval process [2] - There are questions about how quickly asset managers will implement dual-class funds and whether the market will see a significant influx of new ETF share classes [4] Group 2: Administrative Considerations - Asset managers may face administrative challenges in managing dual-class funds, and the transition may not be as rapid as some expect, potentially leading to a gradual rollout rather than a flood of new offerings [4] - Custodians will also need to be prepared for the administrative tasks associated with the introduction of new ETF share classes and the potential movement of investors [4] Group 3: Investor Benefits - Funds that introduce ETF share classes are likely to provide "exchange privilege," allowing existing investors to switch without triggering capital gains taxes, thus offering tax advantages [5] - The in-kind redemption mechanism of ETFs can help purge built-up capital gains, benefiting investors in mutual fund share classes by minimizing potential tax liabilities [5]