State Street Global Advisors is taking a page from Vanguard Group Inc.’s blueprint for multi-share classes to further its bid to insert exchange-traded funds into the American retirement system.

The firm on Friday filed for permission to create mutual funds as a share class of its ETFs, which would be “specifically designed for, and only available to, investors purchasing through a retirement plan.” It’s essentially the inverse of the Vanguard-pioneered structure of issuing ETF share classes of its existing mutual funds — a process that more than 30 issuers have sought to replicate since Vanguard’s patent expired in May 2023.

Should the US Securities and Exchange Commission sign off on the proposal, it would create an avenue for State Street and others to transform their ETF strategies into a vehicle suitable for retirement accounts, which are typically reserved for mutual funds and collective investment trusts. SSGA executive vice president and chief business officer Anna Paglia has led the firm’s efforts to crack into the 401(k) system.

“401(k) plans don’t buy ETFs for all the reasons that are very known to us — technology, regulation — but we believe that these things are going to converge at some point,” Paglia said in an interview in May. “ETFs, just like mutual funds, are used in other parts of the retirement industry — for example, IRAs — and we are really working to build that ecosystem where ETFs can find their way into 401(k) plans as well.”

State Street joins the likes of Charles Schwab and F/m Investments in asking the SEC to create mutual fund share classes of ETFs. More than 30 fund companies — including BlackRock Inc. on Thursday — have filed for permission to issue ETF share classes of existing mutual funds.

State Street estimates that $4 trillion of defined contribution retirement assets are invested in indexed strategies, split almost evenly between mutual funds and CITs, according to Friday’s filing.

While advocates argue that the ETF wrapper has lower costs and is more tax-efficient than other vehicles, there is pushback as capital gains taxes don’t apply to 401(k)s. However, State Street in its application said shareholders in both types of funds would benefit should the SEC approve.

“By having a Mutual Fund Class, the Fund may benefit from having access to Retirement Plan distribution channels and ultimately ETF Class shareholders may benefit from greater economies of scale,” the filing said.

This article was provided by Bloomberg News.