Dimensional Secures SEC Approval for ETF-Mutual Fund Hybrid Structure

The Securities and Exchange Commission has granted Dimensional Fund Advisors approval to offer exchange-traded fund share classes alongside traditional mutual fund shares. This makes Dimensional the second asset manager, following Vanguard, to achieve this capability.

The November 17 order provides exemptions allowing open-end management investment companies to operate both ETF and mutual fund classes within a single fund structure. Dimensional is the first firm to deploy this model for actively managed products, having filed its initial application in July 2023 and submitted three amendments before final approval.

The SEC's order exempts Dimensional from several provisions of the Investment Company Act of 1940, including sections governing share pricing, redemptions, and certain affiliated transactions. Nearly ninety other asset managers are awaiting similar approvals, signaling potential momentum for broader adoption of hybrid fund structures.