Bhanu Singh
Global asset manager Dimensional Fund Advisors, the world’s largest issuer of actively managed exchange traded funds (ETFs), today will launch ETFs in the Australian market to support those financial professionals seeking new ways to access the firm’s systematic investment approach.
Dimensional is initially offering three actively managed core equity strategies locally in a “dual-access” structure under which investors can access a fund through both ASX-listed and unlisted distribution channels. This allows investors to hold and transact in diverse ways according to their own preferences.
“We’ve been offering our systematic investment approach through financial intermediaries for nearly a quarter of century in Australia,” says Bhanu Singh, Dimensional Australia’s CEO. “By launching ETFs, we are expanding their choices in how they access our investment expertise on behalf of their clients.”
The three initial strategies Dimensional is offering in ETF form are Australian Core Equity, Global Core Equity (Unhedged) and Global Core Equity (AUD Hedged). These strategies – among the firm’s most popular – provide broad exposure to the Australian and other developed equity markets, while emphasising the known drivers of higher expected return in small caps, value stocks and more profitable companies.
Dimensional was founded in the US in 1981 and has been in Australia since 1994. The firm manages more than $AU900 billion for investors globally, including more than $38bn for clients in Australia and New Zealand. Its clients are financial intermediaries like advisers, brokers and super funds.
Systematic investing or factor-based investing is a rules-based approach to managing money. It replaces the subjectivity of traditional active management with quantitative research and avoids the rigidities of indexing through an active but process-driven pursuit of higher expected returns.
Dimensional entered the ETF market in the US in November 2020 following a regulatory change. Since then, the firm has experienced significant growth, becoming the largest issuer of actively managed ETFs globally. The firm now offers more than 30 ETFs in the US with approximately $US100bn in assets. It has now decided to move to the dual-access model in Australia because of requests from intermediaries for greater flexibility in how they access the firm’s approach.
“Our success in the US and our discussions with local clients tell us that some prefer the flexibility that ETFs offer,” says Nathan Krieger, who heads Dimensional’s client group in Australia. “It just gives advisers and other intermediaries more ways to access what we do. And we always start with client need.”
