Dimensional converts $8bn tax-managed mutual fund into an ETF

May 10th, 2022 | By | Category: Equities

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Dimensional Fund Advisors has completed the conversion of another of its US tax-managed mutual funds into a transparent actively managed ETF.

Dimensional converts $8bn tax-managed mutual fund into an ETF

Dimensional now offers seven tax-managed equity ETFs collectively housing $48bn in assets.

The Dimensional US Marketwide Value ETF (DFUV US), which houses $8 billion in assets, has been listed on NYSE Arca.

DFUV selects its constituents from a universe of US-listed stocks with value characteristics from any market capitalization segment.

The fund seeks to outperform the benchmark Russell 3000 Value Index by exhibiting light tilts away from conventional market cap-weights based on size, value, and profitability factors.

Dimensional also considers federal income tax implications when making investment decisions. Specifically, the fund’s 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.

The ETF comes with an expense ratio of 0.23%.

The fund marks Dimensional’s seventh, and final, conversion of a US tax-managed mutual fund into an ETF. The other six ETFs collectively house approximately $40bn in assets.

Dimensional US Equity ETF (DFUS US); AUM $5.5bn; expense ratio 0.11%
Dimensional US Core Equity 2 ETF (DFAC US); $14.4bn; 0.19%
Dimensional US Small Cap ETF (DFAS US); $4.2bn; 0.34%
Dimensional US Targeted Value ETF (DFAT US); $6.6bn; 0.34%
Dimensional World ex-US Core Equity 2 ETF (DFAX US); $4.7bn; 0.31%
Dimensional International Value ETF (DFIV US); $3.9bn; 0.35%

Gerard O’Reilly, co-CEO and CIO of Dimensional Fund Advisors, said: “We are pleased to complete our final planned tax-managed mutual fund-to-ETF conversion, which provides tax-sensitive investors with another tool to manage capital gains. Dimensional is dedicated to continuous innovation within our well-constructed, broadly diversified investment solutions and delivering a full suite of ETFs to the financial professionals we work with.”

Dimensional has, by far, converted the most mutual fund assets into ETFs, although other asset managers including JP Morgan, Motley Fool, and Guinness Atkinson have also made sizable conversions.

While ETFs have, for many years, been attracting greater inflows compared to mutual funds due to their liquidity, intraday tradability, lower costs, and tax benefits, the recent trend of converting mutual funds is accelerating that shift in market share.

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