A $506B-AUM Giant Enters the ETF Dimension
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Monday, June 29, 2020

A $506B-AUM Giant Enters the ETF Dimension

A mutual fund titan focused on long-term investing and on distribution through an exclusive FA network is taking the leap into another part of the asset management world. The firm had $506 billion in assets as of May 31.

David Paul "Dave" Butler
Dimensional Fund Advisors
On Friday, Dave Butler and Gerard O'Reilly, co-CEOs of Dimensional Fund Advisors (DFA) [profile], confirmed the company's filing with the SEC to launch its first three ETFs, all active. This will be the Austin, Texas-based quantitative asset manager's first venture out of mutual funds, separate accounts, and commingled trusts.

The funds are expected to hit the market later this year, although the exact timing has yet to be determined given the current global conditions and the usual need for SEC approval. The idea is for the three ETFs to offer diversified exposure to US, non-US developed, and emerging markets.

The DFA team's decision to move into the ETF market was influenced by a September 2019 ETF Rule adopted by the SEC, according to a DFA blog post. The DFA team describes the rule as streamlining regulations around ETFs, and allowing for more flexibility in daily portfolio management and trading.

In the blog post, the DFA team writes that "... the ability to use custom creation and redemption baskets daily offers greater flexibility in the management of ETFs."

According to a spokesperson for DFA, the firm is planning on creating more ETFs in the future. They told MFWire that DFA is, "in conversation with clients," and that the decision is based on what clients think is a "good move;" the new ETFs were strongly influenced by client opinion as well.

Butler stated: "For nearly four decades, we have built our investment offering thoughtfully and systematically. We take the time to understand clients' evolving needs, identifying where we can uniquely add value, and ultimately aim for both a better investment experience and higher returns."

Stradley Ronon Stevens & Young will serve as the ETFs' legal counsel. Yet the proposed ETFs' administration and accounting firms, custodian, distributor, and transfer agent have not yet been named.

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