In a major regulatory milestone, the U.S. Securities and Exchange Commission has officially approved Dimensional Fund Advisors (DFA) to launch an ETF share class on 13 of its existing mutual funds, according to a notice published Monday afternoon. The decision removes the final barrier in DFA’s bid to become the first new asset manager in more than 20 years to offer ETF share classes alongside traditional mutual fund structures.
The approval is widely expected to pave the way for dozens of similar applications across the asset management industry. Until recently, Vanguard held a powerful competitive edge as the only firm with an ETF share class structure—protected by a 20-year patent that expired in 2023. DFA moved quickly following that expiration, receiving preliminary SEC clearance in late September and now securing full approval.
While DFA sought authorization for 13 mutual funds, sources familiar with the plans say the firm is unlikely to roll out all offerings simultaneously. The first ETF share class launches may arrive in early 2026, marking a phased and highly strategic rollout.
Industry leaders have praised the decision. Eric Pan, president and chairman of the Investment Company Institute, said the ruling will “deliver meaningful benefits to mutual fund shareholders,” highlighting investor access to lower-cost, more tax-efficient structures. Advocates argue that ETF share classes allow asset managers to pool operating and distribution costs, enhancing scale advantages and offering multiple access points to the same underlying strategy.
DFA co-CEO and co-CIO Gerard O’Reilly emphasized the investor benefits:
“Share classes allow investors to choose the investment strategy that best suits their needs—and then select the ideal wrapper to access that strategy.”
As ETFs continue to dominate flows and reshape the global investment landscape, DFA’s move signals a breakthrough moment—one that may accelerate innovation, competition, and structural transformation across the entire U.S. fund industry.