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Dimensional Fund Advisors

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Dimensional Fund Advisors
Company typePrivate
IndustryFinance
Founded1981; 43 years ago (1981)
FoundersDavid G. Booth
Rex Sinquefield
HeadquartersAustin, Texas, United States
Key people
David G. Booth
(Executive Chairman)
Dave Butler
(Co-CEO)
Gerard K. O'Reilly
(Co-CEO)
ProductsMoney Management and Investment
AUMDecrease $540 billion (September 30, 2022)[1]
Number of employees
1,400+ (2020)[2]
Websitedimensional.com

Dimensional Fund Advisors, L.P. (branded Dimensional abbreviated DFA[3]) is a private investment firm headquartered in Austin, Texas. Dimensional was founded in Chicago in 1981 by David Booth, Rex Sinquefield and Larry Klotz. The company has affiliates within 13 offices in the U.S., Canada, U.K., Germany, Netherlands, Australia, Singapore, and Japan. Dimensional maintains U.S. offices in Charlotte, North Carolina and Santa Monica, California and has affiliate offices globally. The company is owned by its employees, board members and outside investors.

The company’s founders studied at the University of Chicago under Eugene Fama and Kenneth French. DFA's investment strategy is based on application of the efficient market hypothesis.[4] Dimensional was one of the earliest firms to offer passive investing and "runs the oldest small-cap index fund" in the United States.[5] However, DFA's versions of index funds skew towards smaller company stocks and value stocks, and thus operate differently from most index funds which are weighted by market capitalization.[6] This strategy results in regulators, such as the SEC,[7] and some analysts[8][9][10] describing the funds as actively managed. The company offers equity and fixed income mutual funds and Exchange-traded funds.

In 2009, Dimensional acquired SmartNest, a retirement planning computer software company.[11] Researcher Robert C. Merton left SmartNest's board after the purchase and became a Resident Scientist at Dimensional.[12][13][14]

In November 2020, the company announced it was abandoning its strictly advisor-access only mutual fund business model by offering openly-accessed exchange-traded funds.[15][16][17][18]

References

  1. ^ "Dimensional Investing". Retrieved 2022-10-22.
  2. ^ "Dimensional Investing | Dimensional Fund Advisors". Archived from the original on 2020-12-31.
  3. ^ "FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES: DFA INVESTMENT DIMENSIONS GROUP INC". sec.gov. Retrieved 20 March 2021.
  4. ^ "Dimensional Investing | Dimensional Fund Advisors". Dimensional. Retrieved 2018-11-09.
  5. ^ William J. Bernstein (2002). The Four Pillars of Investing: Lessons for Building a Winning Portfolio. McGraw-Hill, ISBN 0071385290, p. 103
  6. ^ John Rekenthaler (Nov 25, 2020) DFA Is Paying the Price for Its Conviction. Morningstar.com, accessed 19 March 2021
  7. ^ "Registration statement - DIMENSIONAL ETF TRUST". SECURITIES AND EXCHANGE COMMISSION. 16 November 2020.
  8. ^ "DFAU ETF Report". etf.com. Retrieved 20 March 2021.
  9. ^ Liu, Evie (18 November 2020). "Another Fund Manager Enters the World of Exchange-Traded Funds. What's Behind the Trend". Barrons.
  10. ^ Lydon, Tom (December 28, 2020). "The ETF-Mutual Fund Tide is Turning: DFAI and DFAU Switching Sides".
  11. ^ Inklebarger, Timothy (2009-12-02). "Dimensional adds retirement planning software firm". Pensions & Investments. Retrieved 2013-05-12.
  12. ^ "Curriculum Vitae". www.robertcmerton.com. Robert C Merton. Retrieved 2021-01-20.
  13. ^ "Robert Merton". Becker Friedman Institute.
  14. ^ "Next Generation Retirement Planning" (PDF).
  15. ^ "Why Dimensional Fund Advisors is converting six of its mutual funds to the ETF format". CNBC. Retrieved 24 February 2021.
  16. ^ "DFA Takes The Stage With ETFs". etf.com. Retrieved 24 February 2021.
  17. ^ "Dimensional Fund ETFs Launch as Quant Plans to Convert Mutual Funds". Retrieved 24 February 2021.
  18. ^ Johnson, Steve (23 November 2020). "Mutual fund conversions to ETFs set to gather momentum, experts say". Financial Times.
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