In February 2023, Perpetual US Services, LLC filed an application for exemptive relief with the Securities and Exchange Commission (SEC) that, if granted, would allow a mutual fund to create and operate an ETF share class alongside its mutual fund share classes. Such relief would largely mimic the exemptive relief granted to Vanguard in 2000, which had been subject to a Vanguard patent that expired in 2023. Since the filing of the Perpetual application, First Trust Advisors, Fidelity Investments, Morgan Stanley Investment Management, Dimensional Fund Advisors and Guinness Atkinson Asset Management have filed for similar relief.

In the February 2024 issue of The Investment Lawyer, Chapman partners Rick Coyle, Barry Pershkow and Morrison Warren break down the history of the sought-after relief, the potential advantages to such a structure for mutual fund sponsors and shareholders, and share their insights into the SEC’s reluctance to grant such relief, while ultimately arguing that the approval of these applications is the proper step for the SEC to take.

The republished article is linked below with permission.

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