The list of firms seeking exemptive relief from the Securities and Exchange Commission to offer ETF share classes of their mutual funds could grow by another name: Franklin Templeton.
"We're thinking about it," said David Mann, senior vice president and head of ETF product and capital markets for Franklin Templeton, in a interview.
In February 2023, Perpetual US Services, which does business as PGIA, announced the filing of an exemptive application with the SEC seeking an order that, according to a news release, would permit PGIA and its affiliated U.S. investment advisers "to establish an ETF multishare class structure of their respective mutual funds."
"We saw that, we thought about it and just sort of watched," Mann said regarding PGIA's filing, noting that several other firms have filed applications since then. "So, we are now watching a little more closely."
PGIA's filing came just months before the May 2023 expiration of a patent held by Vanguard Group. Since then, Dimensional Fund Advisors, Fidelity Investments, First Trust Advisors and Morgan Stanley Investment Management have each filed applications with the SEC seeking to offer ETF share classes of their mutual funds.
In addition, F/m Investments in an August 2023 news release said that it had filed an exemptive application with the SEC seeking an order that would allow each of the ETFs in the US Benchmark Series — a suite of ETFs designed to simplify access to the U.S. Treasury market — to offer a mutual fund share class.
"I think it's likely we will see additional filings," said attorney Jeremy I. Senderowicz, a shareholder at law firm Vedder Price and a member of the firm's investment services practice group, who declined to comment regarding Franklin specifically. "There's a lot of interest within the industry in utilizing this structure, and I think it could be beneficial to a wide range of fund complexes."
Franklin Templeton had about $1.6 trillion in total assets under management as of Jan. 31, a spokeswoman there said. That included more than $20 billion in ETF assets, she said.
