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Portfolio > ETFs

DFA Now the Biggest Active ETF Asset Manager

By Bernice Napach

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What You Need to Know

  • The firm has nearly $45 billion in active ETFs, which were first introduced just 14 months ago.
  • Much of DFA's ETF asset growth has to do with mutual fund conversions, but the first has also launched other ETFs.
  • It has plans to launch 10 more ETFs this year.

Dimensional Fund Advisors, which launched its first ETF just 14 months ago, is now the largest asset manager of active ETFs.

The firm has roughly $45 billion in ETF assets under management, mostly equity funds, plus four fixed income ETFs, introduced two months ago.

“We are knocking on the door of becoming one of the top 10 ETF issuers,” said Anthony Caruso, ETF strategist at DFA.

Much of the fast-driving growth of DFA’s ETFs is due to the firm’s conversion of six mutual funds to ETFs, which accounts for about $37 billion of its ETFs. The conversions have  “absolutely been a smart strategy” for the firm, said Dave Nadig, director of research and chief investment officer of ETF Trends.

They “served investors well,” said Ben Johnson, director of global exchange-traded fund research for Morningstar. “Each of the six converted funds was a tax-managed strategy. Repackaging them into an ETF wrapper means it will be far less likely that they will distribute taxable gains to tax-sensitive investors in the future as some [of the funds] had in the recent past.”

DFA has long been a favorite asset manager for financial advisors, offering disciplined but flexible long-term strategies based on the ideas that small companies outperform large, value companies outperform growth and profitable companies outperform those less profitable.

“Having those strategies in an ETF wrapper has made ‘the DFA way’ available to legions of advisors who might not have had access in the old model,” said Nadig, noting that the firm’s ETFs have attracted nearly $1 billion in asset flows already this year.

Its four fixed income ETFs, which have collected almost $1 billion since their debut in mid-November 2021 — an achievement DFA executives celebrated in a virtual ringing of the Jan. 19 opening bell at the New York Stock Exchange.

The firm has plans to launch 10 more ETFs — two U.S., four international, three emerging market ETFs and one U.S. real estate ETF later this year, according to a very recent filing with the SEC. Three value ETFs — for the U.S., developed non-U.S. market and emerging markets — are part of that mix, with the first two being small-cap value, which bested the S&P 500’s 27% gain in 2021.

Fees for the proposed ETFs range from 0.19% for the U.S. Real Estate ETF to 0.49% for the International Small Cap Value ETF.

Bernice Napach

@Think_Napach

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