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Nicole Hunter, Dimensional

Dimensional’s converted US tax-managed ETFs start trading


Global fund giant, Dimensional Fund Advisors, with USD637 billion under management, is ‘just getting started’, according to Nicole Hunter (pictured), head of capital markets, commenting on its official conversion of four US tax-managed mutual funds into active, transparent exchange traded funds, extending its existing ETF offering that launched in 2020. With this conversion, Dimensional becomes one of the largest active ETF issuers in the industry with over USD30 billion in combined ETF assets under management.  

The firm plans to convert two additional non-US market tax-managed mutual funds to ETFs in September 2021. The conversions place the firm in the top 10 per cent of all ETF issuers across both active and passive offerings. 

She adds: “We are always focused on doing the right thing for our clients, and this is a unique conversion because the funds were already in tax-managed strategies, and the ETF structure gives the portfolios even more tax efficiency. So, for funds that were often held outside of retirement accounts, this conversion hits a sweet spot.” 

Hunter says that the advisers she talks to are excited about the process. “This year in particular, with all the things going around about taxes, even more advisers and their clients are tax-sensitive. So being able to offer ETFs that are highly tax-efficient vehicles now…the timing couldn’t be better.” 

She says that Dimensional expects to have a comprehensive line up of ETFs to pair with its mutual fund and separately managed accounts (SMAs) solutions, but has not immediately targeted more conversions at the moment.  

“We have big plans,” she says, “and it is all about meeting our clients where they are.” She continues, “If they prefer a mutual fund wrapper, we will continue to have a robust lineup. If they prefer SMAs, we’ll meet them there, and if they like ETFs, we want to make sure we have given them all the tools possible, and we are just getting started.” 

A missing segment in Dimensional’s existing ETF range is fixed income, so a fixed income ETF solution may be on the cards. 

Regardless, she notes, “Whether it’s in ETF form or mutual fund form, Dimensional is bringing the best of active and passive offerings with an eye towards higher expected returns.” 

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