A $527 Billion Quant Giant Slashes Fees With Outflows Building

Quant giant Dimensional Fund Advisors is cutting management costs on more than a third of its mutual-fund offerings.

The money manager, which oversees $527 billion in assets, will slash fees on 33 equity mutual funds by 15% on an asset-weighted basis. The price cut goes into effect at the end of February, the Austin, Texas-based firm said in a statement.

The reductions will bring the prices for many of the mutual funds in line with those for Dimensional’s soon-to-be-launched exchange-traded funds. The asset manager filed plans for three actively managed equity ETFs in June that will charge between 12 and 35 basis points, or $3.50 for each $1,000 invested.

Mutual-fund issuers are fighting against a tide of outflows. Dimensional has seen more than $30 billion exit about 80 of its funds this year, according to data compiled by Bloomberg Intelligence. That compares with $422 billion of outflows across the industry, according to Investment Company Institute data.

Much of that cash has cycled into lower-cost ETFs, which have attracted more than $336 billion of inflows this year. Bloomberg Intelligence analyst James Seyffart said last month that Dimensional may need to lower management fees on its existing mutual funds to stay competitive.

“Though expense ratios for mutual funds are usually higher than those for ETFs, management fees should be similar,” Seyffart wrote in a report.

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