Dimensional Fund Advisors, an Austin, Texas-based $719 billion investment manager that sponsors ETFs, mutual funds and separately managed accounts, is rolling out a new unified managed account platform next month.
The UMA platform—an expansion of Dimensional’s SMA capabilities that launched two years ago—will enable advisors to manage investments including Dimensional’s 38 ETFs, more than 1,500 third-party ETFs and Dimensional’s nine current SMA strategies in a single interface. The new functionality will officially launch on July 8. (FundFire first reported the news last week.)
“A unique aspect of what we are offering is that we are an asset manager providing the SMA and the ETF model tax-management overlay, which facilitates tax management across the sleeves,” said Kaitlin Hendrix, asset allocation research director and vice president, Dimensional Fund Advisors. “If you generate a loss while rebalancing within the ETF sleeve, you can realize a gain while rebalancing within the SMA for a net neutral event. By having the same asset manager managing the SMA and UMA, all the pieces can work well together to get the portfolio closer to target.”
The UMA platform will allow advisors to build ETF-only portfolios with Dimensional and non-Dimensional ETFs or combine ETFs with direct individual securities in single accounts. It will also eventually add support for mutual funds. Dimensional’s system will manage daily asset allocation, tax considerations and cash balances.
Advisors can use ETFs and Dimensional SMAs to customize equity and fixed income allocations, and regional focuses. SMAs within the platform can be customized for individual tax management needs, ESG considerations as well as individual stock, industry, sector, or country preferences.
Putting multiple investments into UMAs can allow for more efficient tax loss harvesting, gifting and cash needs across a suite of investments. Developments in technology, alongside increased experience with using the systems, have enabled UMAs to be offered to investors at lower minimums. In the past, UMAs were only available to high-net-worth investors with minimum accounts of $20 million or more. But Dimensional’s current SMAs and the new UMA are open to investors with minimum account sizes of $500,000.
“Dimensional has over 20 years in expertise in managing funds of funds and sophisticated tax management accounts. It can be quite complex,” Hendrix said. “Technology is part of it, but also we have the expertise to use the technology to deliver investor outcomes.”
Currently, more than 200 advisors managing 900 accounts use Dimensional’s SMAs. They will have access to the UMA functions.
