Tax Advantages Prompted Dimensional to Convert Nearly $29 Billion of Mutual Funds into ETFs
Posted on 06/14/2021
Austin, Texas-based firm Dimensional Fund Advisors (DFA) (former Santa Monica-based firm) moved to convert four equity mutual funds with US$ 28.8 billion of assets into exchange-traded funds (ETF). DFA has already filed for at least two more conversions and is looking at possible fixed income ETF products.
The move puts Dimensional on the cusp of being one of the 10 biggest U.S. ETF issuers by assets
The names of the ETFs are:
The Dimensional U.S. Equity ETF (ticker DFUS, formerly the Tax-Managed U.S. Equity Portfolio)
The Dimensional U.S. Small Cap ETF (DFAS, formerly the Tax-Managed U.S. Small Cap Portfolio)
The Dimensional U.S. Targeted Value ETF (DFAT, formerly the Tax-Managed U.S. Targeted Value Portfolio)
The Dimensional U.S. Core Equity 2 ETF (DFAC, formerly the T.A. U.S. Core Equity 2 Portfolio)
One of the major motivations for the shift in converting from fund to ETF was for capturing the tax advantages.
The conversion plans were unveiled publicly in November 2020.
By crossing the Rubicon, more funds of the US$ 21 trillion mutual fund universe could pursue ETF conversions.
