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DFA Converts 2 More Active Mutual Funds to ETFs

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What You Need to Know

  • They are the Dimensional International Value ETF and World ex US Core Equity 2 ETF.
  • DFA has converted six active mutual funds to six active ETFs, and all are fully transparent.
  • It now has nine active ETFs with total assets of more than $40 billion. Conversions represent 20% of assets.

Dimensional Fund Advisors has converted two more actively managed mutual funds to ETFs, bringing the total number of DFA fund conversions to six, covering more than $8 billion in assets.

The two new ETFs are the Dimensional International value ETF (DIV) and the Dimensional DFA World ex US Core Equity 2 ETF (DFAX), with total operating expenses of 0.35% and 0.31%, respectively. Both ETFs trade on the NYSE Arca exchange. They complete the firm’s plans, announced in November 2020, to convert six actively managed mutual funds to ETFs. It converted four tax-managed active mutual funds to ETFs this past June.

“Today’s listing further demonstrates our commitment to providing the financial professionals we work with a full suite of ETFs that complement our mutual fund and expanded separately managed accounts offerings,” Dimensional Co-CEO and Chief Investment Officer Gerard O’Reilly said in a statement.

“Our strategies go beyond the cost efficiency and high diversification of passive indexing. They have the added benefits of daily, flexible implementation, which aim to deliver higher expected returns and support robust risk management.”

DFA now has a total of nine actively managed equity ETFs — it launched three core equity ETFs last year — with a total of more than $40 billion in combined assets under management. The firm plans to launch fixed income ETFs later this year. DFA is one of the last major asset managers to offer ETFs. But unlike some other asset managers that were also late in entering the ETF market, all its ETFs are fully transparent.

Its co-CEO Dave Butler told ThinkAdvisor in July that the firm’s addition of ETFs to its fund lineup was driven by requests from advisors but made possible by the Securities and Exchange Commission’s new ETF rule. The rule allows greater flexibility for the construction of in-kind baskets of securities and assets that ETFs use to purchase and redeem large aggregations of shares (creation units).

Butler also told ThinkAdvisor that DFA is also developing a special managed account product that will require a relatively low minimum of around $500,000 compared with its current minimum of more than $20 million.