Education Corner


Understanding listed and unlisted ETF share classes

The emerging structure offers many benefits for asset managers and investors

Education corner / Regulation / Understanding listed and unlisted ETF share classes


Listed and unlisted ETF share classes allow investors to access the same investment strategy via different distribution channels.   

Investors can choose the listed share class of a mutual fund or an unlisted share class of an ETF depending on which is more efficient from a portfolio construction perspective.  

This may differ depending on investor type. For example, discretionary fund managers who struggle to access listed products via platforms may find it easier to trade the non-listed share class of an ETF within their model portfolios. 

Conversely, an asset manager looking to launch an ETF version of a mutual fund they already have might find it cheaper and quicker to launch a listed share class instead. It also allows them to build scale in their ETF business much faster than launching from scratch. 

The structure was brought into the mainstream by Vanguard in the US which, until its patient ran out in May 2023, had the exclusive ability to create an ETF share class without the need to label the entire fund as an ETF. 

Despite this, there are some important structural and operational considerations to consider.  

Structural differences

Listed share classes trade on exchange and are brought at a price determined by the market maker via a broker while unlisted share classes are purchased directly from the fund at NAV.  

Traditionally, listed share classes are required to publish their holdings daily – depending on where they are domiciled – and are also required to publish an indicative NAV throughout the day. 

There could also be tax implications when launching unlisted and listed share classes. ETFs could have access to double-taxation treaties, generating a positive impact on performance which could be affected by holding both share classes under the same fund umbrella. 

Asset managers must also consider how one set of shareholders is impacted versus another, particularly when trading. ETFs apply the cost of trading the basket at NAV plus a fee which is applied to each creation and redemption order. 

Meanwhile, swing pricing – designed to pass the trading costs back to investors – is primarily used for mutual funds and unlisted share prices. 


There are also important differences to note depending on where the funds are domiciled. Ireland and Luxembourg, the two dominant fund domiciles in Europe, differ in their approaches to listed and unlisted share classes. 

For example, when an asset manager is looking to launch an ETF share class of a mutual fund, the Central Bank of Ireland (CBI) requires ‘UCITS ETF’ to be included in the name of the sub-fund.  

This was the case for HSBC Asset Management when it became the first asset manager to launch both listed and unlisted share classes within the same Irish-domiciled fund structure.  

This could be seen as a barrier for some investors and has been blamed for a lack of uptake in the structure since it was introduced by the CBI in 2018.  

Meanwhile, Luxembourg-domiciled funds take a different stance on naming rules, with the Commission de Surveillance du Secteur Financier (CSSF) stating the European Securities and Markets Authority’s (ESMA’s) UCITS ETF naming convention only applies at a share class level. 

Key takeaways

  • Listed share classes trade on exchange while unlisted share classes are purchased from the fund at NAV

  • Certain share class structures allow more efficient access to ETFs for certain investors

  • Investors must consider tax implications and trading differences between the two structures

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