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Investors could “choose their preferred wrapper, without incurring transaction costs or potentially adverse tax consequences, through the ability to exchange into ETF shares or to continue to hold mutual fund shares of the same fund,” the application says.
BlackRock also noted that many retirement plans don’t offer ETFs to participants because administrators are often unable to accommodate investments with intraday trading.
If the SEC grants the application, “mutual fund shares offered by a fund could be made available to those retirement plan participants on those retirement plan platforms,” which could benefit both ETF and mutual fund class shareholders, BlackRock said.
Adding an ETF share class to a mutual fund could lower transaction costs and tax liabilities for a fund, BlackRock contended. It could also result in asset growth and great economy of scale, the firm said.
Mutual funds have lost trillions of dollars in assets to ETFs, which offer easier trading and, generally, tax advantages, growing to $10 trillion in 2024, ETF.com noted last week.