Dimensional Fund Advisors launched the US Micro Cap ETF (NYSE Arca: DFMC), the industry’s first actively managed share class exchange-traded fund (ETF). Dimensional US Micro Cap ETF is a share class of the firm’s first fund, the US Micro Cap Portfolio, which launched as a mutual fund in 1981 and pioneered a systematic approach to investing in the smallest stocks in the US market. With a track record of more than 40 years, the fund has delivered 1.44 percentage points of annualized outperformance over its benchmark since its first full month.1
“We have worked closely with the SEC and the firm’s mutual fund and ETF boards over the last several years to broaden investor access to the potential benefits of ETF share classes, including increased tax efficiency and reduced costs from scale,” said Co-CEO and Co-CIO Gerard O’Reilly. “It is fitting for Dimensional to add an ETF share class to its very first fund—a dedicated micro cap strategy that can provide diversification from the broad market and increasingly concentrated large cap strategies.”
In 2019, Dimensional engaged the SEC staff on ETF share class exemptive relief (from the Investment Company Act of 1940), and in 2023, Dimensional filed its application for exemptive relief. The firm has been a strong advocate for the potential benefits that the share class structure could provide both mutual fund-class and ETF-class shareholders. Mutual fund-class shareholders can gain from lower transaction costs and greater tax efficiency, while ETF-class shareholders may benefit from more efficient rebalancing using mutual fund cash flows and lower total portfolio transaction costs.
“Dimensional clients have long benefited from the firm’s expertise in managing systematic investment strategies that go beyond indexing while maintaining low fees and broad diversification,” said Dave Butler, Co-CEO. “Our firm deeply values our connections with institutions and advisors around the world. Today’s launch is a big step forward in continuing to expand our offerings to meet evolving client needs.”
Dimensional is the largest active ETF issuer in the US, with more than $255 billion (USD) in ETF assets under management across more than 40 funds.2 The firm crossed $1 trillion (USD) in global AUM earlier this year in its offerings across asset classes—solutions all backed by a consistent investment philosophy guided by financial science.3
Source: Dimensional
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