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Dimensional Fund Advisors to Launch Actively Managed ETFs

Brenton Garen

This article was originally published on ETFTrends.com.

Dimensional Fund Advisors announced Friday that it plans to launch three actively managed ETFs later this year.

Dimensional has filed a preliminary registration statement with the Securities and Exchange Commission for the launch of three ETFs that will offer broadly diversified, all cap core equity exposure to US, non-US developed, and emerging markets, while incorporating longstanding pillars of Dimensional’s value-added approach to systematic investing.

The ETFs extend how clients may access Dimensional’s investment approach, which draws insights from financial research to emphasize areas of the market with higher expected returns and adds further value through daily implementation that has been tested, refined, and advanced for over 39 years. Dimensional has one consistent investment philosophy that underpins all strategies managed by the firm, regardless of asset class, region, or investment vehicle.

“Our investment process has always focused on delivering the benefits of conventional passive—low-cost, diversified solutions—with the advantages of systematic active—higher expected returns, flexible trading, robust portfolio management, and risk management,” said Gerard O’Reilly, Co-Chief Executive Offer and Chief Investment Officer.

Dimensional has long offered investment strategies through mutual funds, separate accounts, and commingled trusts. In addition to client demand, recent regulation and technology adoption are changing the ETF marketplace. This has enabled Dimensional to expand its offering to include active transparent ETFs, allowing clients greater choice in how they access Dimensional Investing.

“For nearly four decades, we have built our investment offering thoughtfully and systematically. We take the time to understand clients’ evolving needs, identifying where we can uniquely add value, and ultimately aim for both a better investment experience and higher returns,” said Dave Butler, Co-Chief Executive Officer. “The long-term outperformance and high survivorship rate of our solutions compared to the industry are testament to the value provided to our clients.”

Dave Nadig, Director of Research for ETF Trends, said Dimensional is well known for being one of the smartest quant managers out there.

"They specifically highlight the increased flexibility the new ETF Rule will give them as portfolio managers, showing once again that for almost all strategies, the ETF structure is the better mousetrap," Nadig said.

John Hancock Investment Management has worked with Dimensional and its portfolio management teams for more than a decade, and launched ETFs built around Dimensional strategies in late 2015.

JHIM Head of Asset Allocation Models and ETF Product Steve Deroian said today's filing does not change the availability of these ETFs, or the investment philosophy on which they were built and offered.

Deroian said they are appreciative of those who have chosen to invest in its ETFs since they launched nearly five years ago and hope that its clients will continue to see the value in John Hancock ETF equity and sector -specific portfolios.

"As the ETF landscape continues to mature and evolve, we anticipate that there will always be additional entrants to the market," he said. "We wish Dimensional well in their efforts as we all collectively work as an industry to build portfolios for investors."

To learn more about Dimensional's plans in the ETF space, visit https://us.dimensional.com/perspectives/dimensional-investing-in-an-active-etf-structure.

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