Bhanu Singh
Global asset manager Dimensional Fund Advisors, the world’s largest issuer of actively managed exchange traded funds (ETFs), has extended its suite of equity ETFs on the Australian Securities Exchange (ASX) to support financial professionals seeking to access the firm’s systematic approach.
Following its initial launch last November of three actively managed core equity strategies in ETF form, Dimensional has now supplemented that offering with three component funds explicitly targeting long-term premiums available from Australian and global value stocks, as well as global small caps.
The three new strategies are the Dimensional Australian Value Trust (DAVA), the Dimensional Global Value Trust (DGVA) and the Dimensional Global Small Company Trust (DGSM). As with the core funds, the new vehicles are available in a “dual-access” structure accessible through both ASX-listed and unlisted distribution channels.
“These component strategies supplement the Australian and Global Core Equity ETFs launched last year and allow financial professionals to tailor asset allocations to meet a range of client needs,” said Dimensional Australia’s CEO, Bhanu Singh.
“Our strategies offer the benefits of indexing—such as low costs, low turnover, and high diversification—paired with the advantages of flexible implementation that provide a continuous focus on higher expected returns.”
Dimensional’s first three local ETF offerings were Australian Core Equity (DACE), Global Core Equity—Unhedged (DGCE) and Global Core Equity—AUD Hedged (DFGH). Those strategies provide broad exposure to the Australian and other developed equity markets, while emphasising the size, value and profitability premiums. The component strategies offer a more targeted approach to those individual premiums.
Dimensional was founded in the US in 1981 and has been in Australia since 1994. The firm manages more than $AU1.1 trillion for investors globally, including more than $50bn 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 rigorous academic research and avoids the restrictions of indexing through an active but process-driven pursuit of higher expected returns.
“For four decades, we have focused on empowering investment professionals so they can deliver their clients the best investment experience, says Nathan Krieger, who heads Dimensional’s client group in Australia. “We believe a rules-based investment approach can help deliver a more reliable and smoother markets experience for investors and can help to better address a variety of portfolio goals and aspirations.”
Dimensional entered the ETF market in the US in November 2020. Since then, the firm has experienced significant growth, becoming the largest issuer of actively managed ETFs globally. The firm now offers more than 35 ETFs in the US with approximately $220bn in assets. It decided last year to begin offering funds under the dual-access model in Australia because of requests from intermediaries for greater flexibility in how they access the firm’s approach.