Exchange-Traded Funds (ETFs)

WASHINGTON — Today, in the final step that permits Dimensional Fund Advisors to offer exchange-traded funds (ETFs) as a share class within a multiple share class structure (ETF share class), the U.S. Securities and Exchange Commission (SEC) issued its order granting relief. Stradley Ronon serves as counsel to the Dimensional funds and prepared the exemptive application, including the third amended application that was filed on September 26, requesting relief from certain provisions of the Investment Company Act of 1940 to operate such funds.

“This is a seminal moment for Dimensional, which has been an advocate for the benefits that the share class structure could provide to investors, and for the industry as a whole,” said partner Michael Mundt, part of the Stradley Ronon team who assisted with the application. “We are extremely proud that our client entrusted us to work with them on an industry-shaping effort that should enable asset managers to expand investor choice and enhance tax efficiencies.”

Since the SEC issued its public notice that it intends to approve the application, Dimensional, with support from Stradley Ronon, filed the industry’s first registration statement for 13 dual share class products. Dimensional currently advises mutual funds and is also one of the largest active ETF sponsors, ranked by assets under management. The exemptive application was the longest pending application of more than 80 applications filed by fund sponsors to obtain this relief. The Dimensional application has served as the model for the other filings, and the fund industry has been closely monitoring SEC action on the Dimensional request.

The Stradley Ronon team representing Dimensional funds in this matter also includes partners Bruce Leto and Jana Cresswell. Since 1982, Stradley Ronon has assisted Dimensional funds on a variety of novel innovations and industry-firsts, including working with Dimensional on the first major conversion of mutual funds to ETFs at scale.

About Stradley Ronon’s ETF Practice:
Stradley Ronon’s ETF practice provides representation to the independent directors, advisers and/or ETFs for three of the four largest ETF groups. Our ETF practitioners have been at the forefront of recent ETF regulatory developments and novel product innovation, including applications for ETF share class relief; SEC approvals of ETFs that use less transparent, active management strategies; and mutual-fund-to-ETF conversions. Stradley Ronon also collaborated with the Independent Directors Council to publish an update to its white paper on board oversight of ETFs.

About Stradley Ronon Stevens & Young, LLP
Counseling clients since 1926, Stradley Ronon has helped private and public companies — from small businesses to Fortune 500 corporations — achieve their goals by providing pragmatic, value-driven legal counsel. With offices coast to coast, our lawyers seamlessly address the full spectrum of our clients’ needs, ranging from sophisticated corporate transactions to complex commercial litigation.