Dimensional Becomes Second Firm to Win SEC ETF-Mutual Fund Hybrid Approval

The Securities and Exchange Commission granted Dimensional Fund Advisors approval to offer exchange-traded fund share classes alongside traditional mutual fund shares, making it the second asset manager, after Vanguard, to secure this capability.

The November 17 order grants Dimensional exemptions that enable open-end management investment companies to operate both ETF classes and mutual fund classes within the same fund structure, positioning the firm as the first to deploy this model for actively managed products.

Dimensional filed its initial application in July 2023 and submitted three amendments before receiving final approval.

The SEC’s order exempts the firm from several provisions of the Investment Company Act of 1940, including sections governing share pricing, redemptions, and certain affiliated transactions.

Ninety Firms Await Similar Approvals

Nearly ninety other asset managers have filed applications seeking identical capabilities, according to several ETF analysts.

The approval signals potential momentum for a broader wave of hybrid fund structures across the industry.

Nate Geraci, co-founder of ETF Store, noted that Dimensional holds a competitive edge as the first firm authorized to apply this model to actively managed strategies.

While Vanguard pioneered the structure, its primary focus remains passive index funds.

Dimensional’s approval extends the framework into active management, where fund companies typically generate higher fees and maintain greater differentiation from competitors.

James Seyffart, senior ETF analyst at Bloomberg Intelligence, predicted an imminent surge of approvals for firms awaiting similar authorizations.

The hybrid model allows asset managers to offer lower-cost ETF shares alongside traditional mutual fund shares, which can potentially attract investors seeking tax efficiency and intraday trading without forcing existing mutual fund shareholders to convert.

Solana ETF Competition Intensifies

VanEck launched the third U.S. Solana staking ETF on Monday, entering a field where Bitwise and Grayscale have collectively captured over $380 million since late October.

The VanEck Solana ETF, trading under the ticker VSOL, has waived its 0.3 percent management fee through February 17, or until assets reach $1 billion.

Fidelity is set to debut its Solana ETF, ticker FSOL, on November 19 with a 25 basis point fee.

Canary Funds will launch its Solana ETF, ticker SOLC, the same day, in partnership with Marinade Finance for on-chain staking.

Balchunas emphasized Fidelity’s scale advantage as the largest asset manager competing in this category, noting BlackRock’s absence from the Solana market despite its dominance in Bitcoin ETFs.

Bitwise’s Solana ETF, ticker BSOL, currently leads with approximately $450 million in assets under management. Grayscale has also entered the Solana ETF lineup alongside the new entrants.

Regulatory Shift Signals Broader Industry Integration

The hybrid model addresses longstanding friction between mutual fund investors seeking tax efficiency and ETF investors requiring traditional share class options.

The approval builds on the SEC’s September streamlining initiative that eliminated case-by-case reviews for crypto ETF applications, dramatically accelerating product launches across the digital asset space.

Today, the SEC also removed crypto from its examination priorities for 2026, indicating that digital assets are no longer considered a special risk area requiring heightened supervisory focus.

Industry observers view the removal as a tacit acknowledgment that crypto markets have matured sufficiently to warrant treatment comparable to other established asset classes under the agency’s standard regulatory framework.

Digital asset investment products have recently declined amid the general market bear that saw Bitcoin slip below $90K today from $126K October ATH.

Last week, these investment products saw $2 billion in outflows, marking the heaviest weekly withdrawals since February.

The three-week streak resulted in cumulative outflows of $3.2 billion amid sharp price declines across major cryptocurrencies.

Total assets under management in digital asset ETPs dropped 27 percent from their early-October peak of $264 billion to $191 billion.

U.S.-based products accounted for $1.97 billion of last week’s outflows, while others also recorded notable outflows.