Van Eck filing evokes vaunted Vanguard patent
(NEW YORK CITY) Van Eck is looking to launch an exchange traded fund share class on several of its mutual funds, a structure that sits squarely within the scope of Vanguard’s prized ETF patent, the FT reports.
In a filing with the Securities and Exchange Commission dated March 1, Van Eck is seeking exemptive relief to launch an additional share class on one or more of its five mutual funds that would be listed and traded on an exchange. Shareholders of any of the mutual fund share classes of a Van Eck fund would be able to exchange those shares for ETF shares in a tax-free conversion.
The ETF share class is seen by many in the industry as critical to helping ETFs gain scale quickly and further reduce expenses for the mutual fund and ETF investors alike. Yet until now, no one has challenged Vanguard’s exclusive right to set up ETF share classes for its funds.
Vanguard is credited as the firm that invented the ETF share class structure more than a decade ago. It first filed a patent application with the US Patent and Trademark Office in 2001 for the process and technology used to execute the ETF share class and received the first of a series of patents in 2005.
The index fund giant has used that patented technology to vault itself into the upper echelon of ETF providers over the last several years. All of Vanguard’s 64 ETFs are share classes of a corresponding mutual fund, although not all of the corresponding mutual funds are available to individual investors or advisers.
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