ETF 360: Q&A with Dimensional Fund Advisors’ Marlena Lee

For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with Marlena Lee, Head of Investment Solutions for Dimensional Fund Advisors, as she dives into the quick success Dimensional has seen as a new member of the ETF space, along with the upcoming conversion of 6 mutual funds into ETFs.

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While Dimensional has only been in the ETF space for 6 months, it is a well-respected name that has racked up a billion dollars. As Lee explains, this was made possible by their clients, who were happy to invest in Dimensional ETFs. Looking at their offerings and how these ETFs fit the company, Lee notes how the client portfolios are key.

As mentioned, the ETFs were launched because clients were interested in investing in an ETF form. The ETFs fit in with the rest of Dimensional’s strategy to manage and implement them. However, they are in an ETF wrapper, which allows clients who prefer the tax efficiency or being able to trade the ETFs on exchange and bring that into their solutions set.

As Lee states, “We think the ETFs can stand beside a full lineup of our mutual funds, but also give our clients a lot more choice in how to consume us.”

A Historic Conversion

Being one of the first firms to be able to convert mutual funds into ETFs (six are currently in the process of conversion, which is historic as far as this industry is concerned), Lee states how this process will allow Dimensional the opportunity to serve the clients better in regards to tax efficiency. Clients will have that additional benefit with a tax-free conversion.

Additionally, this conversion will provide Dimensional with double the ETFs, which means being able to allow clients to be able to customize their asset allocation. As of now, Dimensional has three market-wide ETFs, but these funds will have different exposure, meaning the clients can build portfolios that more precisely define whether its size or exposure, etc., that’s needed to meet their clients’ needs.

As far as investment solutions go on the ETF or mutual fund side, the strategies are fairly similar on both sides, and it comes down to investors’ preferences. With that said, anyone who wants to invest in the ETFs is welcome, but Dimensional also keeps an education process in place for those with that consideration.

Lee adds, “We think there are many things that we bring to the table to process, like an onion we can keep peeling back the layers to find out all of the things we’re doing with both labels.”

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