Dimensional Secures SEC Approval for ETF-Mutual Fund Hybrid Structure

The Securities and Exchange Commission (SEC) has granted Dimensional Fund Advisors the green light to offer a blend of exchange-traded fund (ETF) share classes and traditional mutual fund shares, making Dimensional the second firm after Vanguard to achieve this. This approval is anticipated to pave the way for more asset managers to adopt similar hybrid structures.

Key Takeaways

Dimensional Fund Advisors is now allowed to offer both ETF and mutual fund shares, following Vanguard.
This hybrid model permits the inclusion of actively managed products alongside traditional offerings.
About 90 other firms are currently seeking similar SEC approvals.
Competition heats up in the Solana ETF market, with new products launched by VanEck, Fidelity, and others.
The SEC's recent changes indicate a shift in how digital assets are regulated, possibly streamlining future approvals.

Dimensional’s Hybrid Approval Sets Stage for Industry Change

The SEC’s recent order has approved Dimensional Fund Advisors to offer a combination of exchange-traded fund share classes alongside standard mutual fund shares. This makes Dimensional the second asset manager, following Vanguard, to receive this approval.

On November 17, the SEC granted Dimensional exemptions that allow open-end management investment companies to manage both ETF classes and mutual fund classes within the same fund framework. Notably, Dimensional becomes the first to apply this hybrid structure to actively managed products, expanding the possibilities beyond Vanguard's passive index funds.

Dimensional initially applied for this approval in July 2023, submitting three amendments before receiving the final nod.

The SEC’s decision grants the firm exemptions from certain provisions of the Investment Company Act of 1940—specifically those related to share pricing, redemptions, and certain affiliated transactions.

Almost Ninety Firms Await Similar Approvals

According to various ETF analysts, around ninety other asset managers are waiting for the SEC to grant them similar capabilities. This approval may indicate a potential shift toward a broader acceptance of hybrid fund structures throughout the industry.

Nate Geraci, co-founder of ETF Store, remarked that Dimensional has a competitive advantage as the pioneering firm allowed to implement this model within active management strategies. While Vanguard initiated this structure, its primary concentration remains on passive index funds. The approval of Dimensional extends this opportunity into actively managed products, which typically generate higher fees and provide more significant differentiation from rivals.

James Seyffart, a senior ETF analyst at Bloomberg Intelligence, predicts an increase in approvals for firms seeking similar authorizations. The hybrid model offers asset managers the ability to present lower-cost ETF shares alongside traditional mutual fund shares. This setup could appeal to investors looking for tax efficiency and intraday trading options without compelling current mutual fund shareholders to convert.

Rising Competition in the Solana ETF Space

VanEck has launched the third U.S. Solana staking ETF, entering a competitive landscape where Bitwise and Grayscale have already gathered over $380 million since late October.

The VanEck Solana ETF, branded under the ticker VSOL, has temporarily waived its 0.3% management fee until February 17 or until it reaches $1 billion in assets. Fidelity plans to introduce its Solana ETF (ticker FSOL) on November 19, featuring a reduced fee of only 25 basis points. Additionally, Canary Funds will present its Solana ETF (ticker SOLC) the same day, partnering with Marinade Finance for on-chain staking.

Balchunas highlighted Fidelity's scalability as the largest asset manager in this segment, pointing out that BlackRock has yet to enter the Solana market, despite its strong presence in Bitcoin ETFs. Currently, Bitwise's Solana ETF (ticker BSOL) leads with roughly $450 million in assets under management, followed by Grayscale.

Regulatory Changes Indicate a Broader Integration of Digital Assets

The recent hybrid model addresses lingering challenges between mutual fund investors, who seek tax efficiency, and ETF investors, who prefer traditional share options. This approval is part of the SEC's September initiative aimed at expediting crypto ETF applications, which significantly accelerates product launches within the digital asset realm.

In another major development, the SEC has today dropped crypto from its priority examination list for 2026, signaling that the agency no longer views digital assets as requiring enhanced supervisory scrutiny. This adjustment is seen as a recognition that the crypto markets have matured enough to be treated similarly to traditional asset classes under established regulatory frameworks.

In the wake of the recent market conditions, digital asset investment products have experienced declines as Bitcoin fell to below $90K from a previous all-time high of $126K in October. Notably, these investment products faced $2 billion in outflows last week—the largest weekly withdrawals since February—culminating in a total of $3.2 billion over three weeks amid significant price drops across major cryptocurrencies.

The total assets under management for digital asset exchange-traded products (ETPs) have plummeted by 27%, falling from a peak of $264 billion in early October to approximately $191 billion now. U.S.-based products accounted for $1.97 billion of last week’s outflows while other regions also recorded significant withdrawals.