Dimensional Adds ETFs to SMA Offering as Platform Crosses $1 Billion in Assets
Dimensional Fund Advisors has added the ability to hold and trade exchange-traded funds (ETFs) along with direct securities in the firm’s separately managed account (SMA) platform. Dimensional SMAs can now be funded with ETFs, and Dimensional ETFs can be used as building blocks to create more customized portfolios. In addition to the diversification and customization benefits, ETFs in SMAs provide opportunities for systematic tax-loss harvesting and tax-efficient rebalancing in both direct securities and ETFs across the portfolio.
“A key attribute of Dimensional SMAs is that we apply tax management within the portfolios of direct equities and ETFs and also consider potential tax synergies between trades across direct equities and ETFs,” said Savina Rizova, Global Head of Research at Dimensional.
Dimensional’s multifaceted approach to tax management goes beyond tax-loss harvesting and considers capital gains, capital losses, and dividend income at every step of the investment process. This approach can now be applied holistically to portfolios of stocks and ETFs to unlock potentially more tax benefits for investors.
Additionally, ETFs can provide simplified and broadly diversified exposure to asset classes such as fixed income. Advisors can also use ETFs to broaden a portfolio’s geographical diversification, as adding comingled solutions can give investors exposure to more international holdings, and more cost-efficiently, than purchasing direct holdings. Commingling ETFs and direct equities in individual portfolios allows financial professionals to put Dimensional’s expertise in managing multi-asset-class allocations to work in each of their clients’ portfolios.
Dimensional’s SMA offering has surpassed $1 billion in assets under management since the SMA Center’s launch in September 2021. This platform broadens access to customized investment solutions by lowering the separate account minimum from more than $20 million to $500,000. This expanded solution builds on Dimensional’s long history of offering bespoke investment solutions to meet client needs and pursue better investment outcomes.
“Expanding access to SMAs to a broader group of investors reflects the strong demand and the future growth of personalized investing,” said Dave Butler, Dimensional Co-CEO. “Dimensional’s highly customizable SMA offering, which now includes our suite of ETFs, allows advisors to deliver thoughtful, personalized investment and client service experiences to their investors at scale.”
Dimensional’s digital SMA Center was custom built in-house using extensive advisor feedback. It features streamlined screening menus in a user-friendly interface, as well as comprehensive transition analysis capabilities. The SMA Center incorporates customization options driven by advisors’ suitability recommendations for each of their clients’ needs—empowering financial professionals to offer value-add systematic investment solutions that are flexible, scalable, and personalized to more investors. Through the SMA Center, advisors can access instant analyses that assess potential tradeoffs of various allocations, allowing them to design, onboard, and manage their clients’ SMAs more mindfully and efficiently.
For more about Dimensional SMAs, click here.
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About Dimensional Dimensional is a global investment manager with more than 40 years of experience going beyond indexing by providing diversified, low-cost solutions that also target higher expected returns.
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Disclosures
Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Consider the investment objectives, risks, and charges and expenses of the Dimensional funds carefully before investing. For this and other information about the Dimensional funds, please read the prospectus carefully before investing. Prospectuses are available by calling Dimensional Fund Advisors collect at (512) 306-7400 or at dimensional.com. Dimensional funds are distributed by DFA Securities LLC.
This information is not meant to constitute investment advice, a recommendation of any securities product or investment strategy (including account type), or an offer of any services or products for sale, nor is it intended to provide a sufficient basis on which to make an investment decision. Investors should consult with a financial professional regarding their individual circumstances before making investment decisions.
There is no guarantee strategies will be successful. Dimensional does not provide any investment, tax, or financial advice. Investors should consult with their financial advisors and tax professionals about their individual circumstances. Investing involves risks include loss of principal and fluctuating value.
Risks include loss of principal and fluctuating value. Investment value will fluctuate, and shares, when redeemed, may be worth more or less than original cost. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, liquidity, prepayments, call risk, and other factors. International and emerging markets investing involves special risks, such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks.
Diversification neither assures a profit nor guarantees against loss in a declining market.
ETFs trade like stocks, fluctuate in market value, and may trade either at a premium or discount to their net asset value. ETF shares trade at market price and are not individually redeemable with the issuing fund, other than in large share amounts called creation units. ETFs are subject to risks similar to those of stocks, including those regarding short-selling and margin account maintenance. Brokerage commissions and expenses will reduce returns.