The SEC’s pending approval of dual share classes marks a major turning point for ETFs, allowing mutual funds and ETFs to share the same underlying portfolio. Dimensional Fund Advisors, which has long pursued this exemption, is expected to be the first mover once operational logistics are in place. 

Industry leaders say investors will benefit from the ability to convert between mutual fund and ETF shares without triggering taxes or transaction costs, though custodians must update systems to enable this functionality. 

Firms like F/m Investments are preparing to launch mutual fund versions of existing ETFs to expand into retirement markets, while others, such as Touchstone Investments, anticipate a slower rollout due to operational hurdles 

Finsum: Fund boards will play a critical oversight role, ensuring proper governance, investor education, and alignment between fund structures as this transformation unfolds.