Dual-Share-Class Product Challenges and Opportunities
May 8, 2025
Gaps between asset managers, intermediaries, and service providers suggest slow roll-out as expected approval of new structures is imminent.
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Dual-share-class exchange-traded fund (ETF) products remain an important evolution and will nudge the industry in the right direction of offering more tax-efficient, lower-cost exposures—but this will not happen overnight. New Cerulli research, produced in partnership with Nicsa, explores the challenges and opportunities dual-share-class product offer from the perspectives of both asset managers and financial intermediaries.
Key Takeaways
The Asset Management Perspective
The dual-share-class structure allows a manager to offer the same exposure via a mutual fund and an ETF share class. Asset managers perceive dual-share-class relief as an opportunity to launch ETF products that port the mutual fund's performance track record while offering greater tax efficiency.
The Intermediary Perspective
Implementation, operational, and compliance burdens of dual-share-class exposures are top of mind concerns for wealth managers. Specific challenges include Reg BI considerations, operational challenges related to the exchange mechanism, and business economics particularly the loss of 12b-1 fees and subtransfer agency fees.
Early Learnings
The potential rollout of dual-share-class products already has interesting industry takeaways. Asset managers must be selective on which products to offer ETF as a share class, with mindfulness for what intermediaries and advisors want and they will likely need to operate on the intermediaries’ timeline.
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SUBJECT MATTER EXPERTS
Meet Our Research Team
Bing Waldert
Managing Director, U.S. Research
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Bing Waldert
Managing Director, U.S. Research
Bing Waldert leads Cerulli’s U.S. Research team comprising seven research practices that cover all elements of the U.S. asset management, wealth management, and retirement markets. He has authored Cerulli reports on the wealth management industry, high-net-worth market, the annuity industry, and retirement markets. He is a frequent board-level and C-suite speaker and well-regarded industry thought leader. He has spoken in front of the Investment Company Institute (ICI), the Asset Management Association of China (AMAC), the Investments and Wealth Institute (IWI), and the Money Management Institute (MMI).
He has worked on client projects on emerging manager expansion strategies, independent registered investment advisors (RIAs), multi-family offices (MFOs), investment platforms, and the outsourced chief investment officer (OCIO) industry. In addition, he has advised multiple private equity firms on acquisitions in the wealth management space.
Full biography here.
Christopher Swansey
Associate Director
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Christopher Swansey
Associate Director
Christopher is an associate director on the Institutional team where he supports multiple reports annually, including the annual outsourced chief investment officer (OCIO) report, and various strategic consulting projects throughout the year. He also regularly contributes to The Cerulli Edge—Institutional Edition, The Cerulli Edge—U.S. Edition, and The Cerulli Edge—U.S. Monthly Product Trends.
Christopher was a Senior Analyst at Mercer working within their executive compensation practice before joining Cerulli in 2018.
Full biography here.
Daniil Shapiro, CFA
Director
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Daniil Shapiro, CFA
Director
Daniil is part of Cerulli’s Product Development practice, where he works on the identification, analysis, and reporting of asset management industry trends with a focus on exchange-traded funds (ETFs) and alternative investments.
Prior to joining Cerulli Associates, Daniil was part of the Product Management and Business Intelligence teams with the MainStay Funds, part of New York Life Investment Management. At MainStay, Daniil supported sales efforts via fund and ETF competitive analysis, product research, and development of marketing materials, as well as performance reporting. Before New York Life, Daniil was part of the risk management practice at Accenture, and held risk and compliance roles at HSBC’s investment bank.
Full biography here.
Sally Jin
Analyst
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Sally Jin
Analyst
Sally is a member of Cerulli's Product Development practice, providing data aggregation and analysis for the team across various investment vehicles, including mutual funds, ETFs, and alternative investments. As an associate analyst, Sally assists in the research and development of Cerulli’s cyclical market reports.
Prior to joining Cerulli, Sally interned at Breckinridge Capital Advisors, Bain Capital, and the New England Council. She graduated summa cum laude from Northeastern University with a Bachelor of Arts in International Affairs and minors in Psychology and Political Science.
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