Dual share classes

Tax Efficiency: ETF share classes use in-kind transactions, which often avoid triggering capital gains taxes. Mutual fund investors could benefit from this structure without selling assets.

Lower Costs: ETFs typically trade commission-free at most brokers, unlike many mutual funds that may have transaction fees or front-end loads.

Intraday Trading: Investors would gain the ability to trade ETF shares throughout the day, unlike mutual funds which only settle at the end of the trading day.

Flexibility: DFA’s proposal allows shareholders to convert mutual fund shares into ETF shares without tax penalties or fees.

⚠️ Potential Risks and Limitations

Tax Efficiency Could Be Compromised: If mutual fund redemptions force asset sales, it could trigger capital gains affecting both mutual fund and ETF shareholders.

Price Deviations: ETF shares may trade at prices above or below their net asset value (NAV), especially in less liquid markets.

Capacity Constraints: Mutual funds can close to new investors when full; ETFs cannot, which may lead to overcrowding in popular ETFs