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ETFs & Mutual Funds: Share Classes, Conversions & More

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  • (1:00) - Taking A Legal Outlook For Mutual Funds and ETFs
  • (5:30) - Understanding Vanguard’s Patent: What Is The Benefit?
  • (9:15) - Will We See Other Providers Implementing Vanguards Structure Into ETFs?
  • (18:00) - Mutual Funds Converting Into ETFs: What Is The Process and What Should Investors Be Aware of?
  • (26:15) - Will Investors Get To See A Spot Bitcoin ETF Anytime Soon?
  • (30:00) - Are There Any Other Products Investors Should Be Looking Out For In The Future?


In this episode of ETF Spotlight, I speak with Aisha Hunt, founder of Kelley Hunt, which assists asset managers in launching ETFs and converting or mimicking mutual fund strategies in ETF wrappers, about some of the latest trends in the fund industry.

The SPDR S&P 500 ETF Trust (SPY - Free Report) , the first US-listed ETF, made its debut in January 1993 and has revolutionized investing. As ETFs have become the vehicle of choice for many investors, mutual funds have been losing assets to ETFs at a record pace.

Mutual funds still hold about $18 trillion in assets, and their structure works best in certain areas, such as 401(k)s. However, due to the general preference for ETFs among investors, many providers are converting their mutual funds into ETFs and launching ETF clones of their successful mutual funds. This trend may accelerate in the coming years.

Vanguard's unique patent to offer ETFs as a share class of its existing mutual funds expired in May of this year. This unique structure greatly benefits investors as it allows the firm to lower expense ratios by spreading operational costs across a wider base of assets while also leveraging the tax efficiencies of the ETF structure.

Some of Vanguard’s most popular ETFs, including the S&P 500 ETF (VOO - Free Report) , Dividend Appreciation ETF (VIG - Free Report) , Total Stock Market ETF (VTI - Free Report) and Value ETF (VTV - Free Report) , are also offered as mutual funds.

Money managers like Dimensional Fund Advisors and Fidelity Investments have filed to offer ETF share classes of their existing mutual funds. F/m Investments has filed to offer mutual fund share classes of its ETFs, allowing investors access to ETF strategies in their 401(k) accounts.

In the past, the SEC has raised concerns about the multi-class structure, including possible negative tax consequences for ETF investors. It remains to be seen whether the regulator will grant exemptive relief from current rules to other ETF providers.

Tune in to the podcast to learn more.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email


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