Dimensional Launches Managed Portfolio Service
Dimensional Fund Advisors has launched a discretionary Managed Portfolio Service (MPS), offering a suite of model portfolio solutions that cater to a variety of investment goals.
All models in the MPS exclusively use Dimensional’s funds. As such, the models follow the firm’s characteristic systematic investment approach, offering evidence-based, diversified, cost-effective portfolios targeting higher expected returns.
The MPS comprises 12 allocations ranging from 100% equity to 100% fixed income, in 20% increments. Six are Core models with modest outperformance expectations. The remaining six are Core Plus models and target a higher outperformance, with a higher tracking error against the market. Dimensional’s MPS is priced at 0.06% in addition to the funds’ ongoing charges (OCF).1
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Dimensional is a pioneer in applying academic research to factor based investing, and the models capture Dimensional’s latest and most advanced thinking on the integration of financial theory, research and implementation.
As a systematic active manager, Dimensional has the flexibility to make decisions that improve expected returns or reduce risks compared to index-tracking strategies. From portfolio design to day-to-day management, Dimensional draws on more than 45 years of experience in fine-tuning its approach to systematic investing.
One Consistent Investment Philosophy
Dimensional’s single investment philosophy is applied throughout its Managed Portfolio Service. This can benefit investors looking for a higher degree of consistency in strategies across their asset allocations.
The starting point for funds the model portfolios invest in is global equity and fixed income markets. Securities with higher expected returns are systematically overweighted. Securities with lower expected returns are underweighted or excluded. Equity allocations focus on size, value and profitability considerations as well as shorter-term drivers of return. Fixed income allocations dynamically adjust term, credit and currency based on expected returns and risk.
Building on Decades of Deep Expertise
About Dimensional’s investment approach, Nathan Lacaze, Co-CEO of Dimensional Fund Advisors Ltd., said: “Successful systematic investing requires expertise across a spectrum of financial disciplines. We target outperformance through a combination of research-led strategy design and decades of experience in implementation that we don’t think can be replicated.”
Martyn Chappell, Head of Wealth Management in the UK and Ireland, said: “Dimensional has supported clients with model portfolio construction for many years. Our Managed Portfolio Service is the next phase, offering financial professionals the complete solution: investment philosophy, portfolio design, daily implementation, asset allocation and rebalancing.
“On top of that, investors who adopt the MPS become part of the Dimensional community and benefit from the spectrum of business strategy and communications support offered under the Dimensional 360® service proposition.”
Dimensional’s MPS is launching initially on Transact and is available beginning early July. On the work with Transact, Martyn Chappell said: “Dimensional and Transact have worked closely for a long time to bring the MPS to fruition, and we are grateful to the team there for their dedication to providing the best possible experience for our mutual clients.”
Footnotes
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1. Other fees may also apply.
Disclosures
Dimensional Fund Advisors Ltd. (“Dimensional UK”) as issuer of the Dimensional Managed Portfolio Service for Integrated Financial Arrangements Ltd. will create portfolios for selection by Advisers. Dimensional UK will separately make ongoing and discretionary investment decisions on the asset allocation of the portfolios for the Dimensional Managed Portfolio Service, in accordance with established parameters as set out in separately published Portfolio Guidelines.
The Dimensional Managed Portfolio Service is intended only for use by a third-party financial adviser, wealth manager, private bank, or other duly regulated financial intermediary as authorised by the FCA (each a “Professional Adviser”). The contents of these materials represent information (not investment advice) for Professional Advisers only and is not for use with retail investors. By opening and viewing these pages you agree that you will not reproduce or provide this information to retail investors.
The Dimensional Managed Portfolio Service is not intended to be the sole or primary basis for such Professional Adviser’s recommendation and/or decision. The Dimensional MPS only invest in assets considered appropriate for retail clients.
Professional Advisers are responsible for making their own independent judgment as to how to use the Dimensional Managed Portfolio Service and/or whether any trades or strategies are suitable for their retail clients. Additionally, Dimensional UK does not provide tax advice. Investors should consult with their financial advisers and tax professionals about their individual circumstances before proceeding.
The Professional Adviser and/or the retail client will both have direct contractual engagements with Integrated Financial Arrangements Ltd, which operates the Transact platform. The Professional Adviser will have a direct contractual relationship with Dimensional UK for the provision of the Dimensional Managed Portfolio Service as a professional client on an “Agent as client” basis, under a separate investment management agreement which governs the provision of discretionary management services by Dimensional UK to a Professional Adviser. Dimensional UK will not have a direct contractual relationship with any underlying client of the Professional Adviser who invests in a Dimensional MPS.
Dimensional UK is not responsible for determining the appropriateness or suitability of the Dimensional Managed Portfolio Service or any of the investments underlying the Dimensional Managed Portfolio Service for any client of a Professional Adviser. Clients must be comfortable to accept some degree of investment risk and have the capacity to sustain capital loss. The Dimensional Managed Portfolio Service (MPS) offer no capital guarantees.
Although the information in, and regarding, the Dimensional Managed Portfolio Service is believed to be materially correct, no representation or warranty is given as to the accuracy of any of the information provided. Certain information included in or regarding the Dimensional Managed Portfolio Service is based on information obtained from sources considered to be reliable.
However, any projections or analysis provided to assist the recipient of the Dimensional Managed Portfolio Service in evaluating the matters described in the Dimensional Managed Portfolio Service may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, any projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results. Dimensional UK makes no representation or warranty, express or implied (except as required by law or regulation) regarding the accuracy, completeness or adequacy of the information.
Dimensional UK has a potential conflict of interest when it establishes the target asset classes, asset allocation objectives or ongoing allocations for the Dimensional Managed Portfolio Service, because it will allocate only to asset classes where Dimensional funds are available. Dimensional UK acts as investment manager, sub-investment manager or investment adviser to the Dimensional funds comprising the Dimensional Managed Portfolio Service and is entitled to receive a fee from (or in respect of) each Dimensional funds, as reflected in the prospectus for the Dimensional funds.
Subject to the terms of the investment management agreement to be entered between Dimensional UK and a Professional Adviser (IMA), Dimensional UK accepts responsibility for losses suffered by the Professional Adviser solely to the extent that the loss is due to Dimensional UK’s gross negligence, wilful default or fraud. Except to the extent that any loss is due to Dimensional UK’s gross negligence, wilful default or fraud, the Professional Adviser will under the IMA indemnify Dimensional UK against all losses which may be incurred by Dimensional UK in relation to the IMA.
Assessment of Value declaration
Dimensional UK has carried out an Assessment of Value of the Dimensional Managed Portfolio Service in accordance with the Financial Conduct Authority’s Consumer Duty and concluded that the fees paid to Dimensional UK by clients for the provision of the Dimensional Managed Portfolio Service are reasonable in respect of the benefits that the Dimensional Managed Portfolio Service offers.
RISKS
Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.