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A Tidal Shift in Asset Management: Exploring the Implications of Vanguard's ETF Patent Expiration

Vanguard, the world’s second-largest asset manager, has held a patent since 2001 allowing the company to manage an “ETF-as-a-share-class” structure, facilitating greater tax efficiency and economies of scale.

This patent, which protects Vanguard’s innovative model of managing a mutual fund and an associated ETF as essentially the same entity, is expiring in May 2023. Vanguard currently operates 70 multi-share class funds, representing around 60% of its total AUM of $4.8tn.

Challenges Faced By American and European Asset Managers