Good morning. Andrew here. This Saturday, we take a deep dive into a potentially major shift in the investing world. Ian Frisch, who has been writing about surprising trends in business for a decade, takes us into the $30 trillion question of whether mutual funds can also market themselves as E.T.F.s. Plus, Calum Marsh, a DealBook contributor who has reported extensively on fitness trends and wrote an upcoming book about the history of CrossFit, speaks with the C.E.O. of Hyrox, a global fitness craze that wants to become an established sport.
The modern market for exchange-traded funds has enabled retail investors to easily put money into basically anything.
That includes various cryptocurrencies ($IBIT and $ETH), the investment strategies of Congressional Democrats ($NANC), pet-care brands ($PAWZ), and private equity funds with exposure to Elon Musk’ s SpaceX ($XOVR) and OpenAI ($ARKVX).
Mutual funds wish they could say the same. But the Securities and Exchange Commission long ago built a firewall between those funds, which are typically accessible through private investment companies, and E.T.F.s, which trade on public exchanges like single stocks.
As E.T.F.s have taken off — growing to encompass over $10 trillion in the U.S. — firms that manage mutual funds have become increasingly unhappy about the forced divide. Without it, they could essentially “rewrap” the basket of assets in a mutual fund as an E.T.F. with greater flexibility and lower taxes.
Asset managers including Fidelity, Morgan Stanley, BlackRock, and Charles Schwab have spent years trying to subvert the firewall. And now they’re close to pulling it off — potentially changing how trillions of dollars are invested.
Institutional and retail traders flock to E.T.F.s for a handful of reasons: accessibility (anyone with a brokerage account can buy the ticker), favorable tax structures (in-kind redemptions and lower capital-gains distributions), intraday trading (mutual funds trade only at the end of the day) and generally lower fees.
Mutual funds may sometimes still be a better choice — for, say, 401(k) contributions, because an investor can buy fractional shares.
But if asset managers were able to offer the same group of managed assets in both structures, investors could choose which best fit their circumstances. It would be like having a reversible T-shirt: yellow on one side and red on the other. It’s still the same shirt; you’re just choosing the way you want to wear it.
Dimensional Fund Advisors has led the charge. When Gerard O’Reilly became its co-C.E.O. and co-C.I.O. in 2017, he made finding a way around the firewall between E.T.F.s and mutual funds a priority.
The difficulty: Only one firm had been given an exception to the S.E.C.’s rule — Vanguard, in 2000 — and it had patented the entire structure it used, effectively shutting out competitors from using the same strategy. O’Reilly didn’t think Dimensional could petition the S.E.C. to rewrite the law, but he did think it might have a shot petitioning for relief from the rules.
After some back-and-forth with the S.E.C., Dimensional officially applied for exemptive relief in July 2023. (It helped, too, that Vanguard’s patent had expired by then.) Dozens of other heavy-hitting investment funds followed suit.
Two years later, Dimensional’s application is on the cusp of approval. “I have directed the commission staff to prioritize their careful review of the many applications filed for this relief, and I look forward to considering their recommendations,” Mark Uyeda said in March, when he was the acting chairman of the S.E.C.
A shift in regulation couldn’t come at a better time for mutual funds: According to Morningstar, 2024 was the third consecutive year of mutual fund outflows, whereas E.T.F.s experienced record inflows; E.T.F. market share, relative to mutual fund assets, has risen from 14 percent to 32 percent.
If the Securities and Exchange Commission grants relief, actively managed mutual funds could maintain their investment strategies while gaining the structural benefits of E.T.F.s. (Dimensional began its stand-alone exchange-traded funds in 2020 after seeing mutual fund outflows; they now oversee roughly $200 billion in E.T.F. assets and have $786 billion under management, according to the firm.)
An increasing number of E.T.F.s are actively managed. While many exchange-traded funds, such as $SPY, passively track an index, actively-managed funds, where the basket of stocks tracked by an E.T.F. changes according to an investment strategy, have gained in popularity.
Assets in active E.T.F. products have risen from $171 billion in 2020 to $866 billion in 2024, according to the asset and wealth management research firm Cerulli Associates.
As of June 2025, active E.T.F.s now account for more than half of all exchange-traded funds.
The frenzy for, and public awareness of, E.T.F.s has prompted some well-known analysts, like Cathie Wood and Dan Ives, to lend their name to a thematic bundle of stocks. Ives recently introduced his namesake AI Revolution ETF, which trades under the ticker — you guessed it —$IVES; it amassed $270 million assets under management in its first 16 days of trading.
The analyst-as-a-brand trend has boomed, so much so that President Trump’s media company, Trump Media & Technology Group Corp., has announced plans to launch a series of E.T.F.s.
If all goes to plan with the S.E.C., the market will see many, many more. Relief applicants and industry insiders hope to receive an answer soon. “I have a high level of optimism that before the end of the year, we’ll have the exemptive relief,” Dimensional’s O’Reilly said.
More than 60 asset managers have petitioned for exemptive relief and, based on the S.E.C.’s recommendation, many of them have amended their applications to mimic Dimensional’s. Once relief is granted, however, it could take months for new offerings to be available to investors.
Still, O’Reilly sees the S.E.C.’s willingness to provide relief under the current rules as a watershed moment in asset management and investing writ large.
”There’s about $10 trillion in assets in E.T.F.s in the U.S. and there’s over $20 trillion in assets in mutual funds in the U.S.,” said O’Reilly. “What this rule means is that those two pots of assets don’t have to play apart anymore. They can play it together.”
IN CASE YOU MISSED IT
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Trump said the U.S. is ending trade talks with Canada. The president said the U.S. would increase tariffs on its North American neighbor because of its 3 percent digital service tax. On Thursday, the Trump administration told Republicans to drop a proposed “revenge tax” that would punish companies based in countries that try to collect new taxes from American firms.
OpenAI has ambitions for self-driving cars. Sam Altman, the start-up’s C.E.O., said on a podcast last week that OpenAI has technology that could “do self-driving for standard cars.” Also in autonomous cars this week: Uber may help finance its founder Travis Kalanick’s bid to buy the U.S. operations of Pony.ai, a Chinese autonomous vehicle company.
Saks faces a debt deadline. A $120 million interest payment tied to financing for its $2.7 billion deal to buy Neiman Marcus is due on Monday. Amid headwinds for retailers and concerns about Saks’s liquidity, some investors have expressed doubts that Saks would make the payment, but a person close to the company told DealBook that the company would meet the Monday deadline.
The C.E.O. building a fitness craze into a sport
Combine the workouts of CrossFit — think lunges, rowing, burpees — with the event format of a Spartan Race or Tough Mudder, and you’ll get something like Hyrox, a fitness race with a quickly growing and rabid fan base.
The competition, which was founded in Germany in 2017, hosts events that span the globe and expects to see 1.5 million participants this year.
Now its founders, Moritz Fürste and Christian Toetzke, are working to turn the enthusiasm for their grueling race (tickets to compete were going for an average of $185 in New York this summer) into a broader business, and — they hope — an established sport, complete with year-round training and pro leagues.
Ahead of Hyrox’s 8th season, which starts July 1, Calum Marsh, a DealBook contributor who regularly covers the fitness space, talked with Toetzke about how it’s approaching the challenge.
You’ve been making competitions longer to accommodate more participants. In Paris, the event was five days long this year. Is your growth limited by the logistics?
We were always worried about if we had too many days, and then we realized: people actually love to race no matter how long. There will be events next season that will be nine days long. So they become more like a festival.
Last time we spoke, in 2024, there were, I think, 2,500 affiliate gyms. How many are there now?
I think we’re at 8,500.
Are affiliate fees as much of a revenue stream for you as the events, or is it kind of ancillary to the event promotion?
It’s not comparable to the event business right now, but we think it will be very important. We believe that Hyrox training makes sense for everyone — even for people who are not signing up for the events.
I get a lot of emails advertising, you know, the official whatever: the official fish oil of Hyrox or the official toothpaste of Hyrox. Is having a robust brand partnership ecosystem a big part of the business?
Yes, we have very strong partnerships. Like, Puma, for instance, which is the biggest part of our branded product line. I have to say, though, that a lot of unauthorized brands are going out and putting out stuff. We have to send a lot of cease-and-desist letters.
You recently announced a partnership to launch an e-commerce store. Is that partly a way of transitioning people out if they, say, get sick of running a race once or twice a year — a way to keep them in the ecosystem?
We want it to be more than just a competition — we want to be a sport, and maybe even more than just a sport. Actually, a lifestyle.
I don’t think people really get bored of the events, either.
Do you foresee this becoming a proper spectator sport?
There’s a big goal for us to make this a spectator sport that also works for television. People like to do their own races, but they also like to watch the best human beings doing the same stuff.
It’s very much in the beginning stages, but it’s growing very fast — in interest, recognition, and awareness. And now we have athletes like Hunter McIntyre becoming the new stars of the sport.
Have you made any inroads with television?
At the moment, we want to keep it free and stream it to reach the most eyeballs. We think we need probably one more year. Television itself is changing very quickly, moving from linear television to streaming. It’s not like it was 10 years ago.
So there are many new opportunities to bring your product in front of viewers. You know, everyone talks about “Drive to Survive.”
Quiz: The heat is on
This week’s crushing heat dome was the latest reminder that the world is falling behind its goals to mitigate climate change. A U.N. report last year estimated that without drastic intervention global average temperatures will increase between 2.6 and 3.1 degrees Celsius by the end of this century. That would far exceed goals set out by the Paris Agreement and could threaten coastal cities like Rio de Janeiro, Shanghai and Miami. It would also upend the economy — by one estimate costing more than $38 trillion annually.
Banks have started to bake this forecast, once thought extreme, into their research. A recent report from Morgan Stanley on the air-conditioning market, which is expected to benefit from increases in urbanization as well as the frequency and intensity of heat waves, said its “base case” was a 3 percent rise in average global temperatures. In that scenario, how much did analysts expect the cooling market to grow by 2030?
A. 16 percent, to $272 billion
B. 41 percent, to $331 billion
C. 104 percent, to $479.4 billion
Thanks for reading! We’ll see you Monday.
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Quiz answer: B.
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