Page 17 - Investment Advisor April 2021

U.S. Core Equity Market ETF (DFAU), outflows in 2020, losing $37 billion. DFA’S PLANS
Dimensional International Markets Core By moving into ETFs, DFA has given In addition to the three new ETFs,
ETF (DFAI) and Dimensional Emerging access to all investors, not just the clients DFA has plans to convert six equity
Core Equity Market ETF (DFAE) — have of financial advisors, to its funds, which mutual funds to ETFs later this year
gained 5.7%, 4.5% and — ETFs that will cost
10.4%, respectively, DFA has long been a favorite among investors 17% to 56%
year-to-date. But only less in fees. The firm
the U.S. Core Equity advisors, distributing its mutual funds plans to cut the fees
Market ETF, which of 33 equity mutual
has an expense ratio of only to IAs, but it has been losing assets. funds by 15% later
0.12%, outperformed Among the top 10 fund companies tracked this month.
its peers and bench- DFA “has come
mark index, according by Morningstar, it experienced the largest to market leverag-
to Morningstar. DFAI ing their scale and
charges 0.18% and outflows in 2020, losing $37 billion. pricing these funds
DFAE 0.35%. aggressively in an
DFA has long been a favorite asset use an asset management approach that effort to appeal to the ETF commu-
manager among financial advisors, dis- has been described as a precursor to nity,” said Todd Rosenbluth, head
tributing its mutual funds only to advi- smart beta — favoring certain funda- of ETF and mutual fund research at
sors, but it has been losing assets. Among mental factors (dimensions) based on CFRA. “We expect DFA to have con-
the top 10 fund companies tracked by research by economist Eugene Fama tinued success despite arriving very
Morningstar, it experienced the largest and finance professor Kenneth French. late to the ETF market.”

Putnam Investments Prepares to Enter ETF Market

nother firm hoping for big Putnam Sustainable Future ETF — and EXPECTED LAUNCH
A debut is Putnam Investments, two will target large-cap equities: the “Putnam Investments is excited to launch
a Boston-based asset manager that Putnam Focused Large Cap Growth its first suite of actively managed ETFs,
distributes its mutual funds through ETF and the Putnam Focused Large providing financial advisors and inves-
financial advisors, and is entering the Cap Value ETF. tors with another vehicle to access our
ETF market. The Sustainable Leaders ETF tar- firm’s key investment strategies,” said
The firm, which has $190 billion gets companies committed to sustain- Robert Reynolds, president and CEO of
in assets split almost equally between able business practices. The Sustainable the firm, in a statement. Reynolds added
mutual funds and institutional assets, Future ETF focuses on companies that the firm expects to “gain meaningful
announced plans to launch four actively whose products and services contribute traction in the years ahead.”
managed equity ETFs, all semi-trans- to sustainable social, environmental and According to Morningstar, fund flows
parent, meaning they won’t disclose economic development. for Putnam Investments fell $4.7 billion
their actual holdings on a daily basis. All All four ETFs seek long-term capi- in 2020.
four ETFs are similar to mutual funds tal appreciation and will use Fidelity’s Putnam expects all four ETFs will be
of the firm. tracking basket methodology that will available in the spring following com-
Putnam’s entry into the ETF market include some but not all of the ETF pletion of the SEC registration process.
will follow that of another mutual fund- holdings and will be published daily The firm currently offers mutual funds,
only firm that distributed exclusively
on the ETF’s website along with its
separately managed accounts, collective
Tom/stock.adobe.com through advisors, then made the same overlap with the actual holdings of the investment trust, private funds and non-
U.S. funds.
ETF on the prior business day. The
pivot: Dimensional Fund Advisors.
actual ETF holdings will be published
Two of the Putnam ETFs will focus
on sustainable investing — the Putnam
monthly with a 30-day lag on Putnam
Bernice Napach can be reached at
Investments’ website.
Sustainable Leaders ETF and the
[email protected].
APRIL 2021 INVESTMENT ADVISOR 15