Vanguard filed a patent in 2001 to create ETf share classes for existing mutual funds.
This exclusive patent expired in 2023.
Numerous firms have shown interest in adopting this structure and are awaiting SEC approval to proceed.
There are concerns that mutual fund outflows may increase the likelihood of taxable capital-gains distributions for ETf shareholders.
"The US Securities and Exchange Commission is expected to approve applications for dual-share-class structures, perhaps as soon as this summer, allowing managers to add an ETF sleeve to an existing mutual fund. More than 50 firms, including BlackRock Inc. and State Street Corp., are waiting for the regulator’s greenlight to deploy the hybrid structure —made possible after Vanguard Group Inc.’s exclusive patent
expired two years ago."https://www.advisorperspectives.com/articles/2025/05/28/wall-streets-vanguard-style-funds-draws-warnings
