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Anyone familar with J. Hancock's ETFs that track Dimensional Funds (DFA)?
I don't believe individual investors need an advisor to purchase these ETFs. Not exactly a DFA fund wrapped into an ETF, but here are the 11 ETF options:
DFA insists that their funds are not index funds, because of their flexibility in how they track their proprietary indexes. They don't have to have the same securities or even securities selected from the same pool that the index uses. They don't have to trade anywhere near the time that the underlying index makes a change.
All of this appears to be absent in the ETFs, at least according to your second informational article: " No patient trading. No tax management. Nothing like the key value-added factors we look for in DFA funds"
Outside of the brand name (DFA) what are these ETFs offering you that you can't get in other index-y funds/ETFs?
I'm not saying that these funds are good or bad, just that you can't draw any inference from the management company, since these ETFs are not managed the same way as their funds. Even the factor model that DFA is using does not appear to be their traditional one, so one can't easily look at how well their particular model performs relative to other indexing approaches.
In fairness, I did check the SAI which says that these funds will provide daily disclosures of their portfolios (a key legal requirement of actively managed funds). So the law does provide them a fair amount of flexibility. But are they using any of that (or at least more than any other fundamental/enhanced index ETF)?
These will—like the first batch of Hancock ETFs—track indexes developed and provided by Dimensional Fund Advisors, which is also the subadvisor for the funds. The methodology targets stocks with smaller size, higher relative profitability and lower relative price.[my bold]
Will the methodology make any difference whatsoever, over time, with these sector jobbers? Or is this just a DFA sales hook, and they will never use the flexibility this structure provides them, to any great extent, to any positive effect? Perhaps, perhaps not. Out of curiosity, after MFO board musing several days ago re. Vanguard vis-a-vis DFA, I graphed out the results to date, from inception, for the "multifactor" Midcap and Healthcare, and compared them to standard index funds for those spaces. Given it has only been 6 months, and given market behavior over this interval, it would be rather imbecilic to conclude anything from it. That stated, if there is special elixir in the DFA sauce, it has yet to show in returns. If you intend to wait and watch for it, then I'm with @msf--- I suspect you're gonna be waitin' a looooooong time.
Six months in, the healthcare version has a grand total of $16 million in assets and trades at a tiny volume of 7,000 shares (yesterday at a scorching clip of 2,200). Unless there are others in the stable with reasonable volume, I'd suggest forgetting 'em for now, and if possibly interested look again later, say in another six months to a year.
Comments
Regards,
Ted
http://www.etf.com/sections/daily-etf-watch/daily-etf-watch-ishares-plans-esg-funds
Yes, some here have some familiarity with them:
http://www.mutualfundobserver.com/discuss/discussion/23844/smart-beta-in-etf-structure-the-j-hancock-dfa-way#latest
DFA insists that their funds are not index funds, because of their flexibility in how they track their proprietary indexes. They don't have to have the same securities or even securities selected from the same pool that the index uses. They don't have to trade anywhere near the time that the underlying index makes a change.
All of this appears to be absent in the ETFs, at least according to your second informational article: " No patient trading. No tax management. Nothing like the key value-added factors we look for in DFA funds"
Outside of the brand name (DFA) what are these ETFs offering you that you can't get in other index-y funds/ETFs?
I'm not saying that these funds are good or bad, just that you can't draw any inference from the management company, since these ETFs are not managed the same way as their funds. Even the factor model that DFA is using does not appear to be their traditional one, so one can't easily look at how well their particular model performs relative to other indexing approaches.
In fairness, I did check the SAI which says that these funds will provide daily disclosures of their portfolios (a key legal requirement of actively managed funds). So the law does provide them a fair amount of flexibility. But are they using any of that (or at least more than any other fundamental/enhanced index ETF)?