Dimensional converts two global ex-US mutual funds worth $8bn to ETFs

Sep 16th, 2021 | By | Category: ETF and Index News

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Dimensional Fund Advisors has converted a further two tax-managed mutual funds, collectively housing $8.2 billion in assets, into transparent actively managed ETFs.

Gerard O’Reilly, co-CEO and Chief Investment Officer, Dimensional Fund Advisors

Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors

The $4.7bn Dimensional World ex-US Core Equity 2 ETF (DFAX US) and $3.5bn Dimensional International Value ETF (DFIV US) have been listed on NYSE Arca.

DFAX selects its constituents from a universe of developed and emerging market companies from any market capitalization range, excluding stocks listed in the US. The fund seeks to outperform the benchmark MSCI All Country World ex-US Index by exhibiting light tilts away from conventional market cap-weights based on size, value, and profitability factors. The ETF’s expense ratio is 0.31%.

DFIV, meanwhile, invests in non-US developed large-cap companies that Dimensional believes to be priced cheaply based on a comparison to book value. Within this segment, the fund will also exhibit light tilts away from conventional market cap-weights based on size, value, and profitability factors. The fund comes with an expense ratio of 0.35%.

Both ETFs consider federal income tax implications when making investment decisions. Specifically, the funds’ managers buy and sell securities with the goal of delaying and minimizing the realization of net capital gains as well as maximizing the extent to which any realized net capital gains are long-term in nature.

Despite only making its ETF debut less than a year ago, Dimensional has catapulted itself to become one of the largest active ETF issuers in the industry with more than $40 billion in combined ETF assets under management.

The introduction of these two latest ETFs follows the launch of three active multi-factor equity ETFs in 2020 and the conversion of four tax-managed US equity mutual funds to active transparent ETFs in June of this year.

Dimensional plans to continue building on this progress by launching its first fixed income ETFs later this year.

Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors, said: “Today’s listings further demonstrate our commitment to providing a full suite of ETFs that complement our mutual fund and expanded separately managed accounts offering. Our strategies go beyond the cost efficiency and high diversification of passive indexing. They have the added benefits of daily, flexible implementation which aims to deliver higher expected returns and support robust risk management.”

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