Vanguard Rivals Finally Get Hands On Its Tax-Busting Fund Design

For more than two decades, US money managers have looked on enviously as Vanguard Group reaped the benefits of a unique structure that grafted the advantages of an ETF onto its biggest mutual funds. The design, protected by patent, saved its investors billions of dollars and helped the Jack Bogle-founded firm grow into an $11 trillion giant.

Now, in what could be the most consequential shift in the American investment industry in years, Vanguard is finally set to lose that competitive edge.

Dozens of rival asset managers are on the brink of adopting the same structure, after the US ...