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SEC approves Dimensional Fund Advisors launch of ETF share class for 13 mutual funds
DFA generally restricts access to its mutual funds to investors working with a "select group" of investment advisors.
ETFs are on the opposite end of the spectrum - vehicles that everyone has access to and ones that are more likely to be used for short term trading.
DFA's move into ETFs strikes me as unseemly given their philosophy of guiding investors. Though it's understandable from a business perspective. But having abandoned a raison d'être, why not open up their mutual funds to the general public as well?
IIRC, GMO made the argument that their investors wanted the convenience to trade, which seems antithetical based on the minimal amount of time I have paid attention to that company.
It would seem obvious that they are loosing clients to ETfs and advisors that are not part of their networks ( I don't know if they have specific selection criteria for advisors other than $s manged) and want to attract clients without the minimums
Do Dimension advisors have to pay for the privilege?
GMO has only opened up a couple of their funds but interesting some are also available at the Thrift Savings Plan Mutual Fund Window
Do Dimension advisors have to pay for the privilege?
Dimensional previously required advisors to undergo specific training before they could offer Dimensional funds. I don't know if this is still the case or if there are any additional "pay-to-play" requirements.
@WABAC I'm confident that DFA says it requires investors to a DFA-trained advisor so that investors get sound guidance. Lately I haven't been able to find this on any "authoritative" source. The best I can do right now is point to Bogleheads Wiki:
Using advisors as gatekeepers is supposed to ensure that customers will be under the guidance of advisors who understand a disciplined, long-term approach, and insulate DFA from the difficulties and transactional costs of investors flooding in and out of funds based on recent performance.
I did not find "authoritative" information via the DFA website or elsewhere. PDFs from two financial services firms did include the following statement.
"Unlike traditional fund managers where advisers can place business immediately, advisers must complete rigorous training at their own expense before they can recommend Dimensional funds to their clients. DFA want to be satisfied the adviser’s knowledge, understanding, and business processes share an affinity with their own. In addition, advisers are encouraged to follow a program of continual education and improvement."
@WABAC I'm confident that DFA says it requires investors to a DFA-trained advisor so that investors get sound guidance. Lately I haven't been able to find this on any "authoritative" source. The best I can do right now is point to Bogleheads Wiki:
Using advisors as gatekeepers is supposed to ensure that customers will be under the guidance of advisors who understand a disciplined, long-term approach, and insulate DFA from the difficulties and transactional costs of investors flooding in and out of funds based on recent performance.
Comments
ETFs are on the opposite end of the spectrum - vehicles that everyone has access to and ones that are more likely to be used for short term trading.
DFA's move into ETFs strikes me as unseemly given their philosophy of guiding investors. Though it's understandable from a business perspective. But having abandoned a raison d'être, why not open up their mutual funds to the general public as well?
IIRC, GMO made the argument that their investors wanted the convenience to trade, which seems antithetical based on the minimal amount of time I have paid attention to that company.
I haven't seen what DFA is saying.
Do Dimension advisors have to pay for the privilege?
GMO has only opened up a couple of their funds but interesting some are also available at the Thrift Savings Plan Mutual Fund Window
I don't know if this is still the case or if there are any additional "pay-to-play" requirements.
@WABAC I'm confident that DFA says it requires investors to a DFA-trained advisor so that investors get sound guidance. Lately I haven't been able to find this on any "authoritative" source. The best I can do right now is point to Bogleheads Wiki: https://www.bogleheads.org/wiki/Dimensional_Fund_Advisors
PDFs from two financial services firms did include the following statement.
"Unlike traditional fund managers where advisers can place business immediately,
advisers must complete rigorous training at their own expense before they can recommend
Dimensional funds to their clients. DFA want to be satisfied the adviser’s knowledge,
understanding, and business processes share an affinity with their own.
In addition, advisers are encouraged to follow a program of continual education and improvement."
https://www.aesinternational.com/hubfs/All%20About%20You%20-%20Wealth/Post%20Discovery/Why%20Use%20DFA.pdf
https://1435699331.rsc.cdn77.org/operations/2020/Dimensional%20Ethos%20v.2.0.pdf
I'm keeping an eye on their short and ultra-short bond funds.