SEC Issues Order for DFA Exemptive Application, Opening the Door to ETF Share Classes

Who may be interested: Investment Companies; Investment Advisers; Boards of Directors 

Quick Take: Following the notice of intent to grant relief in September, and having received no request for a public hearing into the application, the SEC issued an Exemptive Order for Dimensional Fund Advisors (DFA) to offer ETF share classes in 13 of its mutual funds, a move widely seen as a potential turning point for the mutual fund industry.  

On November 17, 2025, the SEC formally granted DFA’s long-pending application to add ETF share classes to existing mutual fund portfolios. The exemptive relief allows DFA’s open-end funds to offer an ETF share class alongside existing mutual fund share classes in the same portfolio, a structure that has only become possible industry-wide since Vanguard’s patent for ETF share classes in passively-managed mutual funds expired in 2023. The approval of DFA’s application clears the way for approval of a number of substantially identical applications filed by other asset managers.

DFA first filed its application for the ETF share class in July 2023. The firm subsequently amended the application on April 1, May 30, and September 26, 2025, reflecting updates and clarifications negotiated during the SEC staff’s review process.

In late September 2025, the SEC issued the formal notice of its intention to grant the exemptive relief, and invited formal hearing requests from the public. With no hearing requests received, the SEC issued an Order granting the exemptive relief.

The exemptive relief imposes a range of disclosure and oversight obligations, including initial and annual board determinations that the ETF share class structure continues to serve the best interests of both ETF and mutual fund shareholders, as well as requirements for monitoring cash levels, brokerage practices and capital gains allocations.

The SEC’s order can be found here.