Factor investing giant Dimensional Fund Advisors (DFA) has launched its first global equities strategy structured for NZ investors.
Under a fund-hosting arrangement with the Wellington-based Implemented Investment Solutions (IIS), local investors now have access to the DFA Global Sustainability Fund in a portfolio investment entity (PIE) wrapper – in either hedged or unhedged flavours.
The international shares product release comes just a month after NZ advisory services and investment wrap firm, Consilium, launched a PIE version of a DFA global bond strategy under the Evidential Investment Funds brand.
DFA has long been a popular manager in NZ among many Consilium-associated and other financial advisers but until now investors have only had access to funds issued by the manager as Australian unit trusts.
PIEs generally provide better tax-efficiency for NZ investors but DFA also registered the Australia-domiciled Sustainability World Equity Trust under trans-Tasman mutual recognition rules last week.
According to the DFA PIE documents: “The Fund invests in a diversified portfolio of securities listed on global developed markets (excluding Australia) with the potential for long-term capital growth with increased emphasis on higher expected return securities and adjusted to take into account certain Sustainability Considerations including but not limited to environmental and social considerations.”
Figures from research house, Morningstar, show Dimensional topped the sustainable fund pop charts in Australia and NZ over the March quarter of this year with net flows of some US$243 million – head of Vanguard (US$165 million) and Australian Ethical (US$156 million): BetaShares (US$122 million) and Nanuk (US$71 million) rounded out the Australasian sustainability fund top five by flows during the first three months of 2022.
The new DFA NZ products carry an annual total fund charge of 0.41 per cent with a buy-sell spread of 0.1 per cent (or 0.12 per cent for the hedged version).
IIS has appointed BNP Paribas as custodian and administrator for the DFA funds while MMC provides registry services. Public Trust is supervisor.
DFA was founded on efficient market principles espoused by Nobel Prize-winning economists Eugene Fama and Ken French. The DFA strategies apply the now five-factor Fama-French models to a portfolio management style that sparked the ‘smart beta’ trend.
Founded in the US in 1981, DFA now claims over A$881 billion in funds under management globally across equity and fixed income assets.
The new DFA PIEs will hit the shelves this Wednesday.
IIS provides fund-hosting services to about 20 managers.