2026 brings regulatory shifts in exchange-traded funds (ETFs)

A dual-share ETF allows a single fund to offer both a mutual fund share class and an ETF share class under one structure, with shared assets and management. Previously, Vanguard had held a patent on this structure since 2003, which expired in 2023.

The SEC recently signaled its intent to approve these structures‡—first with Dimensional Fund Advisors in September 2025, followed by formal exemptive relief in November 2025. Since that ruling, more than 80 traditional asset managers have submitted appeals to the SEC for dual-share class exemptive relief, hoping to tap into the U.S.’s $10 trillion in ETF assets under administration‡.

For fund families, this means potential operational efficiencies—one portfolio, one board, and the ability to serve investors who prefer either wrapper without running parallel vehicles.

Are you ready for dual-share ETFs?

UMB Fund Services has served ETFs for years, both on our shared-services platforms and as standalone trusts. We are closely monitoring dual-share ETF developments and have gathered several questions we have received about the topic. Below are our answers to common dual-share ETF questions we’ve received in light of the recent regulatory changes.

Does having one board for both products make operations substantially easier?

Potentially. Dual-share structures make it possible to have a single board overseeing both the mutual fund and ETF classes. However, asset managers may underestimate the added governance complexity. Even with a shared board, you’re dealing with two distinct wrappers with different operational, regulatory, and investor dynamics.

Dual-share classes add governance complexity—boards need fluency in both wrappers. Trustees need to understand ETF creation and redemption mechanics, authorized participant relationships, intraday NAV, secondary market trading dynamics—on top of traditional mutual fund governance.

We’re thinking about adding an ETF share class to our existing mutual fund. What should we expect operationally?

We anticipate that most asset managers interested in adding an ETF share class will do so anticipating conversions from mutual fund shares to ETF shares. Conversions will be the biggest operational hurdle for the industry in the near term.

For any potential conversion now, the process is highly manual. There’s no straight-through processing. It requires coordination between mutual fund transfer agents, ETF transfer agents, and intermediaries—each with their own workflows and systems. Even Vanguard, which has handled conversions with the benefit of an in-house broker-dealer, has processed them manually.

We do anticipate some dual-share launches that skip the conversion route entirely—managers launching fresh products in a dual-share format from day one. That may be easier in some cases than retrofitting an existing fund.

Administrators who can navigate manual complexity today while preparing for automation tomorrow will serve clients best. The Depository Trust and Clearing Corporation (DTCC) is working toward automated functionality, and UMB is part of both the DTCC and the Investment Company Institute (ICI), which are operating groups closely focused on this topic.

Is a dual-share structure a good fit for our fund?

Before we answer this common question, we ask, “Who is your end investor? What’s your distribution strategy? Does your investment style benefit from ETF characteristics?”

Not every fund should launch an ETF. Not every ETF-suitable strategy will benefit from a dual-share class, just as the ETF product sleeve itself doesn’t fit every investment type.

Rather than directing you to one solution, we prefer to interview you to provide a consultative, product-neutral approach. We operate at the intersection of the two fastest-growing registered fund categories—ETFs and interval/tender-offer funds—so we can counsel on several options.

What should we be doing to prepare for dual-share ETFs?

Our top recommendations for preparing for dual-share ETFs are to evaluate whether this fund type fits within your strategy, assess your board’s readiness, and choose an administrator with experience in both wrappers.

UMB serves dozens of ETFs, both as standalone trusts, and on multiple series-trust platforms, where all boards have ETF experience represented. Our multi-product platform provides operational experience with both mutual fund and ETF servicing—which is critical when navigating the manual workflows that dual-share structures require today. We understand the coordination challenges, the transfer agent handoffs, and the intermediary complexities. We will help you think through whether dual-share ETFs make strategic sense for your business.

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