U.S. Core Equity Market ETF (DFAU),Dimensional International Markets CoreETF (DFAI) and Dimensional EmergingCore Equity Market ETF (DFAE) — havegained 5.7%, 4.5% and
10.4%, respectively,year-to-date. But onlythe U.S. Core EquityMarket ETF, whichhas an expense ratio of0.12%, outperformedits peers and benchmark index, accordingto Morningstar. DFAIcharges 0.18% andDFAE 0.35%.
DFA has long been a favorite asset
manager among financial advisors, dis-
tributing its mutual funds only to advi-
sors, but it has been losing assets. Among
the top 10 fund companies tracked by
Morningstar, it experienced the largest
outflows in 2020, losing $37 billion.
By moving into ETFs, DFA has givenaccess to all investors, not just the clientsof financial advisors, to its funds, which
use an asset management approach thathas been described as a precursor tosmart beta — favoring certain fundamental factors (dimensions) based onresearch by economist Eugene Famaand finance professor Kenneth French.
In addition to the three new ETFs,DFA has plans to convert six equitymutual funds to ETFs later this yearDFA “has cometo market leveraging their scale andpricing these fundsaggressively in aneffort to appeal to the ETF community,” said Todd Rosenbluth, headof ETF and mutual fund research atCFRA. “We expect DFA to have continued success despite arriving verylate to the ETF market.”
Putnam Investments Prepares to Enter ETF Market
Another firm hoping for big debut is Putnam Investments,a Boston-based asset manager thatdistributes its mutual funds throughfinancial advisors, and is entering theETF market.
The firm, which has $190 billionin assets split almost equally betweenmutual funds and institutional assets,announced plans to launch four activelymanaged equity ETFs, all semi-trans-parent, meaning they won’t disclosetheir actual holdings on a daily basis. Allfour ETFs are similar to mutual fundsof the firm.
Putnam’s entry into the ETF marketwill follow that of another mutual fund-only firm that distributed exclusivelythrough advisors, then made the samepivot: Dimensional Fund Advisors.
Two of the Putnam ETFs will focus
on sustainable investing — the Putnam
Sustainable Leaders ETF and the
Putnam Sustainable Future ETF — and
two will target large-cap equities: the
Putnam Focused Large Cap Growth
ETF and the Putnam Focused Large
Cap Value ETF.
The Sustainable Leaders ETF targets companies committed to sustainable business practices. The SustainableFuture ETF focuses on companieswhose products and services contributeto sustainable social, environmental andeconomic development.
All four ETFs seek long-term capital appreciation and will use Fidelity’stracking basket methodology that willinclude some but not all of the ETFholdings and will be published dailyon the ETF’s website along with itsoverlap with the actual holdings of theETF on the prior business day. Theactual ETF holdings will be publishedmonthly with a 30-day lag on PutnamInvestments’ website.
“Putnam Investments is excited to launch
its first suite of actively managed ETFs,
providing financial advisors and inves-
tors with another vehicle to access our
firm’s key investment strategies,” said
Robert Reynolds, president and CEO of
the firm, in a statement. Reynolds added
that the firm expects to “gain meaningful
traction in the years ahead.”
According to Morningstar, fund flows
for Putnam Investments fell $4.7 billion
Putnam expects all four ETFs will beavailable in the spring following completion of the SEC registration process.The firm currently offers mutual funds,separately managed accounts, collectiveinvestment trust, private funds and non-U.S. funds.
Bernice Napach can be reached email@example.com.
DFA has long been a favorite among
advisors, distributing its mutual funds
only to IAs, but it has been losing assets.
Among the top 10 fund companies tracked
by Morningstar, it experienced the largest
outflows in 2020, losing $37 billion.