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DFA Cuts Management Fees on 77 Funds

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Dimensional Fund Advisors, whose mutual funds are sold only through financial advisors, is cutting management fees for 77 mutual funds as of Feb. 28, 2020.

The cuts range from 1 to 8 basis points and average 8% on an asset-weighted basis, based on average assets for the fiscal year ended Oct. 31, according to the firm. Affected funds include the firm’s flagship core, value and fixed Income portfolios. 

After the cuts, management fees on the 77 funds will range from a low of 9 basis points, for the firm’s Intermediate Government Fixed Income and Inflation-Protection Securities portfolios, to a high of 80 basis points for its Emerging Markets Small Cap Portfolio.

DFA also announced new, lower limits for expense fees of five funds: Global Small Company and Global Social Core Equity portfolios and Two-Year Fixed Income and Two-Year Government portfolios and VIT Inflation-Protection Securities Portfolio, ranging from 15 to 47 basis points. A full list of the affected funds can be found here.

“We evaluate expense ratios and management fees for every fund on an ongoing basis and look to make adjustments where appropriate,” said Co-CEO Dave Butler in a statement, adding that DFA has cut management fees or expense caps earlier this year and in 2017 and 2015.” 

“We expect to do better than benchmarks and peers, after fees, so we fight for every basis point,” noted Gerard O’Reilly, Co-CEO and CIO.  

DFA is known for its factor-based approach to investing, which tilts toward value and smaller companies and predates many of the smart-beta strategies used by other fund companies.  

Its latest announcement of fee cuts follows mutual fund and ETF fee reductions from multiple asset managers including Vanguard, Fidelity, Schwab, BlackRock (for iShares) and JPMorgan, plus the elimination of stock and ETF commissions by the brokerage operations of many of those same firms.

According to Morningstar’s latest fund flows report, DFA took in a net $2.43 billion over the 12 months ended Nov. 30, 2019, following a net outflow of $2.18 billion in November. The firm had total assets of $436 billion as of Nov. 30, according to Morningstar. DFA’s website and Form ADV show assets of $569 billion.

— Check out DFA Taps Dallmer as COO on ThinkAdvisor.