This was the year that dual share classes finally got their wings. The biggest development in years for the open-end fund world is the advent of dual share classes, meaning funds can create ETF shares of mutual funds and vice versa. The concept is far from new: Vanguard until 2023 had a patent on ETF shares of mutual funds, and it launched its first more than 20 years ago. More than 80 asset managers filed this year with the Securities and Exchange Commission for exemptive relief from requirements under t ...

Core Viewpoint - The introduction of dual share classes for mutual funds and ETFs is set to enhance access to retirement plans, with F/m Investments leading the way in filing for these classes [2][3]. Group 1: Dual Share Classes - F/m Investments has filed for the first mutual-fund share classes of ETFs, aiming to bridge access to retirement plans [2]. - The SEC has approved an exemption for Dimensional Fund Advisors, allowing asset managers to file for dual share classes of all their funds [3]. - The dual share class structure allows fund boards to decide which strategies should have either an ETF or mutual fund share class, facilitating product offerings [3]. Group 2: Advantages for 401(k) Plans - The mutual fund share class allows existing ETF strategies to be ported to mutual funds, preserving performance history, which is crucial for 401(k) plan fiduciaries [4]. - This structure enables funds to be added to 401(k) menus, as fiduciaries typically require three- or five-year track records for investment options [4]. Group 3: Initial Offerings and Future Plans - F/m plans to initially offer two mutual fund share classes of existing ETFs and one ETF share class of a current mutual fund, focusing on its US Treasury 3 Month Bill ETF and Ultrashort Treasury Inflation-Protected Security ETF [5]. - The company has over $18 billion in assets under management and is expanding its product offerings beyond dual share classes [5][6]. Group 4: Broader Product Development - F/m launched a series of passive fixed-income funds aimed at tax efficiency regarding dividends [6]. - The company has filed for a line of investment-grade corporate bond ETFs with maturities from six months to 30 years and is preparing an "opportunistic income" ETF [6].