Dimensional lists four active transparent fixed income ETFs and files for 10 more active equity ETFs
US asset manager Dimensional Fund Advisors has listed the company’s first four active transparent fixed income ETFs and filed a preliminary registration statement for 10 more equity ETFs.
The firm writes that it launched one of the industry’s first systematic bond funds in 1983.
“The firm has continued to refine and advance its investment process and today manages more than 35 strategies and USD120 billion in fixed income assets, as of the end of October 2021. The new fixed income ETFs build on Dimensional’s legacy of thoughtful, flexible implementation, which offers robust risk management and uses information in market prices to invest in bonds with higher expected returns, rather than trying to outguess the market or time interest rates.”
The NYSE-listed funds are: Dimensional Core Fixed Income ETF (NYSE Arca: DFCF), Net expense ratio: 0.19 per cent, which is a US core fixed income solution pursuing higher expected returns through systematic duration and credit management.
The second fund is the Dimensional Short-Duration Fixed Income ETF (NYSE Arca: DFSD), with a net expense ratio of 0.18 per cent. This fund is a US short-duration core solution pursuing higher expected returns through systematic duration and credit management.
The third fund is the Dimensional National Municipal Bond ETF (NYSE Arca: DFNM), with a net expense ratio of 0.18 per cent. This fund is a national municipal bond solution targeting higher expected returns while seeking to provide income that is exempt from federal personal income tax.
The final fund in the range is the Dimensional Inflation-Protected Securities ETF (NYSE Arca: DFIP) with a net expense ratio of 0.11 per cent. This fund is a US TIPS solution targeting higher expected returns while providing protection from inflation.
“Just as multi-factor equity investing has gained prominence over the last decade, we believe investors will increasingly look to systematic fixed income solutions, which present reliable and transparent means of accessing bond markets and the flexibility to target higher expected returns,” says Co-CEO and Chief Investment Officer Gerard O’Reilly.
“Fixed income investing has long been inundated with active strategies that try to outguess markets and passive funds that are too rigid to nimbly target higher returns,” says Dave Plecha, Dimensional’s Global Head of Fixed Income. “Dimensional fixed income solutions go beyond indexing and provide flexibility to navigate dynamic market conditions in a cost-effective and transparent way.”
Dimensional also filed for 10 new active transparent ETFs with the Securities and Exchange Commission (SEC). The strategies offer exposure to a variety of US, developed international, emerging markets, and real estate equities, as well as component solutions that target companies based on known drivers of higher expected returns.
Once listed, the firm's ETFs will cover a wide range of asset classes and sectors, providing financial professionals with the components to build complete asset allocation models using Dimensional ETFs.
The following funds are included in the filing:
International Core Equity 2 ETF
Emerging Markets Core Equity 2 ETF
US Small Cap Value ETF
International Small Cap ETF
International Small Cap Value ETF
Emerging Markets Value ETF
US High Profitability ETF
International High Profitability ETF
Emerging Markets High Profitability ETF
US Real Estate ETF
“Dimensional’s expanded ETF suite leverages the firm’s 40-year track record of thoughtful research and meticulous implementation of the best ideas in financial science,” says Co-CEO Dave Butler. “We dedicate every day to sharpening our research and its practical application across our full offering of mutual funds, ETFs, and SMAs in pursuit of the best possible investment experience for every client.”