Dimensional Hits $200B in ETF Assets

It took nearly as long to build the Hagia Sophia.

Dimensional Fund Advisors just surpassed $200 billion in ETF assets, a milestone that came less than five years after the firm brought its first exchange-traded fund to the market. Much of the growth has happened since 2023, when it reached $100 billion in ETF assets and began rolling out additional products. That has coincided with two factors putting wind into the ETF business’ sails — demands for low costs and active management. The firm, which takes an untraditional approach to active management, is known for “strategic beta” or “smart beta,” in which investment decisions are passive, but the timing of rebalancing involves active choices. It bills itself as the top issuer of active ETFs.

“Our clients have lots of disparate needs when it comes to investment solutions,” said Wes Crill, senior client solutions director at Dimensional. “The active ETF landscape seems to be growing substantially.”

Activating Funds

Dimensional has seen $123 billion in flows since late 2020, with $44 billion coming into the newly established ETFs via conversions of the company’s existing mutual funds. To date, the firm has 41 ETFs and is effectively first in line for the long-coveted dual share class structure, pending approval by the Securities and Exchange Commission. That development would let asset managers offer ETF share classes of mutual funds and vice versa. Companies that have the capabilities to handle both mutual funds and ETFs could launch versions of existing strategies more easily, and gain tax benefits stemming from ETFs’ in-kind redemptions. 

The firm’s ETF sales have been trending up over the past few years:

• The funds have raked in $20 billion so far this year, compared with $38 billion in all of 2024, $31 billion in 2023, and $26 billion in 2022.
• Of the 41 total ETFs, 16 saw net inflows of more than $1 billion last year.

A New Dimension: After investors began shedding shares of Dimensional funds in 2019, the firm lowered fees and introduced its ETFs, which quickly brought sales back up, according to Morningstar. While the company has converted some mutual funds to ETFs, it offers nearly identical strategies in both vehicles, along with separately managed accounts. That’s a necessity, as preferences based on tax treatment can change, Crill said. “What’s interesting today to investors … may not always be the case,” he said. “That’s why we have to have a diverse set of offerings.”

— Emile Hallez