Dimensional Fund Advisors, a global leader in systematic investing, listed today the company’s first four active transparent fixed income exchange-traded funds (ETFs) and filed a preliminary registration statement for 10 more equity ETFs.
Dimensional Fixed Income ETFs
Dimensional 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 $120 billion in fixed income assets, as of the end of October 2021. The new fixed income exchange-traded funds (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%
• Description: US core fixed income solution pursuing higher expected returns through systematic duration and credit management
Dimensional Short-Duration Fixed Income ETF (NYSE Arca: DFSD)
• Net expense ratio: 0.18%
• Description: US short-duration core solution pursuing higher expected returns through systematic duration and credit management
Dimensional National Municipal Bond ETF (NYSE Arca: DFNM)
• Net expense ratio: 0.18%
• Description: National municipal bond solution targeting higher expected returns while seeking to provide income that is exempt from federal personal income tax
Dimensional Inflation-Protected Securities ETF (NYSE Arca: DFIP)
• Net expense ratio: 0.11%
• Description: 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,” said 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,” said 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 Files for 10 Additional Equity ETFs
Dimensional also filed today 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.
Dimensional is committed to providing financial professionals with a comprehensive suite of ETF solutions that leverage the power of our investment engine—a consistent philosophy combined with a value-added approach to implementation that the firm has been testing, refining, and advancing for four decades.
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,” said 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.”
More information about Dimensional ETFs can be found here: https://us.dimensional.com/etfs
ABOUT DIMENSIONAL FUND ADVISORS
Dimensional is a leading global investment firm that has been translating academic research into practical investment solutions since 1981. Guided by a strong belief in markets, we help investors pursue higher expected returns through a systematic investment process that integrates research insights with advanced portfolio design, management, and trading, while balancing tradeoffs that can impact returns. Dimensional is headquartered in Austin, Texas, and has 13 global offices across North America, Europe, and Asia. As of September 30, 2021, Dimensional manages $653 billion for investors worldwide. For more information, please visit dimensional.com.
Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and charges and expenses of the Dimensional funds carefully before investing. For this and other information about the Dimensional funds, please read the prospectus carefully before investing. Prospectuses are available by calling Dimensional Fund Advisors collect at (512) 306-7400 or at us.dimensional.com. Dimensional funds are distributed by DFA Securities LLC.
With regard to the 10 new ETFs in registration: The information contained in this material is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This material and the prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
This information is not meant to constitute investment advice, a recommendation of any securities product or investment strategy (including account type), or an offer of any services or products for sale, nor is it intended to provide a sufficient basis on which to make an investment decision. Investors should consult with a financial professional regarding their individual circumstances before making investment decisions.
Risks include loss of principal and fluctuating value. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, liquidity, prepayments, call risk, and other factors. Municipal securities are subject to the risks of adverse economic and regulatory changes in their issuing states.
ETFs trade like stocks, fluctuate in market value and may trade either at a premium or discount to their net asset value. ETF shares trade at market price and are not individually redeemable with the issuing fund, other than in large share amounts called creation units. ETFs are subject to risk similar to those of stocks, including those regarding short-selling and margin account maintenance. Brokerage commissions and expenses will reduce returns.
The investment objective of each of the four newly listed fixed income ETFs is as follows:
Core Fixed Income ETF—to seek to maximize total returns from the universe of eligible investments.
Short-Duration Fixed Income ETF—to maximize total returns from the universe of fixed income securities in which the Portfolio invests.
National Municipal Bond ETF—to seek to provide current income that is expected to be exempt from federal personal income tax.
Inflation-Protected Securities ETF—to provide inflation protection and earn current income consistent with inflation-protected securities.