With the SEC reportedly poised to decide whether or not to bless ETF share classes of mutual funds, new research suggests that most fund firms are interested in the idea ... but don't expect an immediate flurry of launches post-approval.

Loren Fox Fuse Research Network LLC Director of Research

Yesterday (September 11), Loren Fox, director of research at Fuse Research Network, revealed new research findings related to the possible regulatory approval of ETF classes, based on a summer 2025 survey of "senior product leaders at 33 asset management firms." Fox reveals that the audience for the survey (whose findings are included in Fuse's four-chapter Product Management & Development 2025 Benchmark report, released last week) broke down like this: 33 percent of respondents come from large asset managers (with more than $100 billion each in AUM), 40 percent from mid-size firms (with between $25 billion and $100 billion each in AUM), and 27 percent from small firms (with less than $25 billion each in AUM).

The Fuse team's findings suggest that an SEC blessing of ETF share classes would not be a proverbial opening of a flood gate.

"Based on our findings, 29% of firms believe they could launch ETF share classes 12 to 18 months after SEC approval," Fox tells MFWire via email. "24% believe it would be 9 to 12 months; and the rest think it's too hard to know."

The survey results also suggest that the vast majority of fundsters' firms are interested in launchin ETF share classes:

26 percent say they've already filed for ETF share classes but no ETF share class plans yet;

Another 26 percent say they haven't filed but "would strongly consider ETF share classes";

22 percent say they've already filed for ETF shares and have plans to launch them;

13 percent say they plan to launch ETF shares but haven't yet filed; and

Another 13 percent say they haven't filed for ETF shares and don't plan to consider them.

Back in the spring, in an earlier Fuse poll, 52 percent of asset managers said they planned to be in wave 1 or 2 of launching ETF shares. 35 percent said their plans on the subject were still TBD.

"Many operational and distribution considerations remain uncertain, and as a result, firms are unsure how quickly they could even take advantage of any okay from the SEC," Fox writes:

An ETF share class is just one of several routes to launching ETFs. Firms are not waiting for the SEC to okay the dual share class structure; they are launching entirely new ETFs, rolling out ETFs that are cousins to existing mutual funds, and they are converting mutual funds into ETFs (or studying the possibility of conversion). Nearly half of the financial advisors we survey tell us that they plan to boost their usage of active ETFs, and asset managers are responding to this rising demand.

 

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