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DFA Launches Digital SMA Platform, Slashes Minimum Investment

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What You Need to Know

  • The tech-enabled platform cuts the SMA investment minimum to $500,000 from more than $20 million.
  • It integrates hundreds of customization options for clients, including tax-management and ESG preferences.
  • The platform was developed in consultation with financial advisors, DFA's primary clients.

Dimensional Fund Advisors has launched a digital platform for separately managed accounts that lowers the minimum investment for SMAs to $500,000 from more than $20 million previously.

The new platform enables financial advisors, who are the firm’s primary clients, the ability to offer more flexible investment solutions within well-designed, highly diversified and cost-efficient portfolios, according to the firm.

The SMA platform integrates hundreds of customization options for clients, including preferences around tax management; environmental, social and governance (ESG) characteristics; and industry and security exclusions. Financial advisors were consulted in its development to make onboarding, launching, managing and monitoring SMAs an easy and scalable process, the firm says.

“The future of wealth management will be marked by continued personalization of investments and client service,” said Dimensional Co-CEO Dave Butler, in a statement. “Our expanded SMA offering is a natural extension of Dimensional’s investment process delivered in a customizable vehicle, and it furthers our aim to offer more choice in how financial professionals serve their clients.”

The new SMA platform allows advisors to implement customized portfolios for a greater number of investors at scale — portfolios that complement the firm’s mutual funds and ETF offerings.

Like those offerings, the SMA solutions are based on Dimensional’s core investment strategies, which begin with systematic tilts toward sources of higher expected returns — stocks with smaller market caps, lower relative prices and higher profitability. This approach differs from commercial indexes that are often the starting point for direct-indexing products, according to DFA.

The SMA web-based platform also offers:

  • Flexibility with securities selection and sector holdings
  • Daily portfolio monitoring
  • Efficient portfolio design based on rigorous research into long-term, short-term and intraday drivers of expected returns
  • A broad range of tax-management considerations to improve after-tax returns while meeting clients’ income needs and identifying charitable-giving opportunities
  • Incorporation of ESG considerations to align investments with clients’ values and, depending on the options available through clients’ custodians, helps clients select a proxy-voting policy that is most consistent with their preferences, including sustainability-focused approaches

Dimensional’s new SMA platform is the latest in a series of new offerings from the asset manager, which had $660 billion in assets as of June 30.

Last November, it entered the ETF market for the first time, followed by more ETF launches in December and this year, when it converted some mutual funds to ETFs in June and September. It plans to introduce bond ETFs before the end of the year.