Daily ETF Watch: Feeder-Fund Quest

FlexShares is embracing a trendy fund structure patented by Vanguard.

HungTran_100x66.jpg
|
Reviewed by: Hung Tran
,
Edited by: Hung Tran

FlexShares is embracing a trendy fund structure patented by Vanguard.

FlexShares has filed regulatory paperwork seeking permission to offer fund-of-funds ETFs and master feeder funds, a trend that is coursing through the ETF universe and embraced by other issuers including Deutsche Bank, Charles Schwab and Fidelity Investments.

Master-feeder structures have become trendy in the ETF space because of their flexibility in allowing ETFs, serving as the feeder fund, to hold assets of a mutual fund. The structure, while different, recalls a Vanguard patent on its share-class structure whereby its exchange-traded funds are separate share classes of identical open-end mutual funds.

Vanguard, which launched its first ETF under the structure in 2001, is now the No. 3 U.S. ETF company, with more than $346 billion in assets, according to data compiled by ETF.com Analytics. The patent is said to be in effect until 2019.

There are no further filings or launches.

 

Hung Tran is a former staff writer for etf.com.