Dimensional Fund Advisors is expanding its ETF suite and has filed a preliminary registration statement with the Securities and Exchange Commission (SEC) for four new sustainability-focused ETFs.
The firm writes that the new funds are designed to pursue lower emissions exposure within portfolios that invest in US, developed international, and emerging market equities as well as global fixed income markets.
“Dimensional is dedicated to providing financial professionals with high-quality solutions to meet investors’ needs and align with their values, including growing interest in sustainability,” says Co-CEO Dave Butler. “The new ETFs build on Dimensional’s experience in managing sustainability strategies in mutual funds and separate accounts over the past decade.”
The ETFs included in the filing are:
Dimensional US Sustainability Core 1 ETF
Dimensional International Sustainability Core 1 ETF
Dimensional Emerging Markets Sustainability Core 1 ETF
Dimensional Global Sustainability Fixed Income ETF
The firm writes that its sustainability strategies, the first of which launched in 2008, offer a patented approach to applying environmental and other sustainability criteria within a robust investment framework. Drawing upon the firm’s work with leading scientists and experience integrating research and data within investment processes, Dimensional’s new strategies are designed to target measurable sustainability goals while seeking broad diversification, efficient cost management, and higher expected returns, the firm says.
When listed, the four new funds will join a growing lineup of Dimensional ETFs, currently totalling 20 funds with approximately USD48 billion in assets under management, further solidifying Dimensional as the largest active ETF issuer by AUM globally, the firm says.
Dimensional writes that it goes beyond indexing by using a flexible approach to systematically pursue higher expected returns in broadly diversified, low-cost investment solutions across asset classes and vehicle type. For equities, drivers of higher expected returns include size, relative price, and profitability. For fixed income, term and credit premiums largely drive relative performance.
“Our teams have conducted extensive research into ESG considerations and developed a measurable approach to systematically integrating sustainability data into our portfolios,” says Co-CEO and Chief Investment Officer Gerard O’Reilly. “Our approach applies what we believe is the best available data to help investors incorporate their sustainability values in portfolios without sacrificing sound investment principles.”